Directions
(1-10): Read the following passage carefully and answer the following
questions given below it.
Today, with
a Noble prize to its credit, Grameen is one of the largest
microfinance organisations in the world. It started out lending small
sums to poor entrepreneurs in Bangladesh to help them grow from a
subsistence living to a livelihood. The great discovery its founders
made was that even with few assets, these entrepreneurs repaid on
time. Grameen and microfinance have since become financial staples of
the developing world. Grameen’s approach, unlike other
microfinanciers, uses the group-lending model. Costs are kept down by
having borrowers vet one another, typing together their financial
fates and eliminating expensive loan officers entirely. The ultimate
promise of Grameen is to use business lending as a way for people to
lift themselves out of poverty.
Recently
Grameen has taken on a different challenge – by setting up
operations in the US. Money may be tight in the waning recession, but
it is still a nation of 1,00,000 bank branches. Globally, the working
microfinance equation consists of borrowing funds cheaply and keeping
loan defaults and overhead expenses sufficiently low. Microlenders,
including Grameen, do this by charging colossal interest rates – as
high as 60% or 70% - Which is necessary to compensate for the risk
and attract bank funding. But loans at rates much above the standard
15% would most likely be attacked as usurious in America.
So, the question is
whether there is a role for a Third World lender in the world’s
largest economy. Grameen America believes that in a few years it will
be successful and turn a profit, thanks to 9 million US households
untouched by mainstream banks and 21 million using the likes of
payday loans and pawn ships for financing. But enticing the unbanked
won’t be easy. After all, profit has long eluded US microfinanciers
and if it is not lucrative, it is not microlending, but charity. When
Grameen first went to the US, in the late 1980s, it tripped up. Under
Grameen’s tutelage, banks started microloans to entrepreneurs with
a shocking 30% loss. But Grameen America says that this time results
will be different because Grameen employees themselves will be making
the loans, not training an American bank to do it. More often than
not, the borrowers, Grameen finds, in the US already have jobs (as
factory workers for example) or side businesses – selling
toys, cleaning houses etc. The loans from Grameen, by and large,
provides the steadier source of funding, but they don't create
businesses out of anything. But money isn’t everything. More
importantly for many entrepreneurs, group members are tremendous
sources of support to one another. So even if studies are yet to
determine if Grameen is a clear-cut pathway out of poverty, it still
achieves something useful.
Q1. What has
adversely affected the success of microfinance institutions in the
US?
(a) The focus of
these institutions is on making a profit at any cost instead of being
charitable to the needy.
(b) American banks
engaged in microlending were the most severely hit during the
recession.
(c) A widespread
perception among bankers that these institutions are better suited to
developing countries.
(d) Their failure to
attract those outside the formal banking system as customers
(e) Americans are
too proud to accept aid from Third World countries.
Q2. Why has Grameen
made a second attempt to launch itself in the US?
(a) The willingness
of US banks to provide the necessary staff and funds to facilitate
the spread of microfinance
(b) The rates of
interest on loans in the US are exorbitant, making it easier to
recover capital.
(c) The realization
that a large percentage of the American population not reached by
mainstream banks can be trapped
(d) Recognition of
the fact that disbursing credit in developing countries during the
recession is too risky.
(e) None of these
Q3. Which of the
following can be inferred from the passage?
(a) Microfinance has
been successful only in Asian countries.
(b) Microfinance
makes individual borrowers dependent rather than independent.
(c) America has the
largest number of banks in the world.
(d) There is scope
for microfinance institutions to be profitable in developed
countries.
(e) There are no
informal sources of credit in developed countries.
Q4. According to the
author, what has enhanced the likelihood of success for Grameen
America at present?
(a) Its success in
Bangladesh and other developing countries.
(b) The absence of
other microfinance institutions for competition.
(c) The fact that
America is currently in the midst of a recession.
(d) It provides
loans at nominal rates of interest, ie below 15 per cent.
(e) None of these
Q5. Which of the
following can be said about Grameen?
(A)Its success in
developing countries will ensure its success in developed countries.
(B)It ensures that
the poor in developing countries enjoy a subsistence standard of
living.
(C)It has
demonstrated that the poor are far more likely to repay loans that
the affluent.
(a) None
(b) Only A
(c) Only A and C
(d) Only B
(e) Only C
Q6. What is the
central theme of the passage?
(a) The contention
that Grameen is doomed to fail in developed countries.
(b) A comprehensive
evaluation of the current status of the American economy.
(c) A discussion
about the prospects of Grameen and microfinance in the US.
(d) The role of
banks in facilitating microlending efforts in developed nations.
(e) Microfinance
efforts are useful in developing countries but are futile in
developed ones.
Q7. Why was Grameen
America’s initial US initiative a flop?
(A) Lack of proper
training to Grameen America personnel.
(B) Grameen’s
refusal to adapt their system to meet the needs of the American poor.
(C) It ended up
giving loans at half their customary rates of interest.
(a) None
(b) Only A
(c) Only A and C
(d) Only B
(e) Only C
Q8. Which of the
following is a benefit of the Grameen system of microfinance?
(a) If a single
member is unable to repay a loan, other group members will repay it.
(b) Dispensing with
the expense of technology networks to monitor advances.
(c) It utilizes the
vast bank network already existing in a country.
(d) Group members
can sanction loans and verify if borrowers have sufficient
collateral.
(e) Backing that
borrows receive from other group members.
Q9. Which of the
following is most similar in meaning to the word “ELUDED” as used
in the passage?
(a) Avoided
(b) Duped
(c) Abandoned
(d) Intangible
(e) Betrayed
Q10. Which of the
following is most opposite in meaning to the word “COLOSSAL” as
used in the passage?
(a) Short
(b) Lavish
(c) Minority
(d) Frugal
(e) Insignificant
Directions (11-15):
Choose the option which is the antonym of the word mentioned in the
question.
Q11. Ally
(a) adversary
(b) partner
(c) fence-sitter
(d) almighty
(e) relax
Q12. Oblivious
(a) apparent
(b) unperturbed
(c) nonchalant
(d) alert
(e) absent-minded
Q13. Affirmative
(a) obliging
(b) uncivilized
(c) platonic
(d) negative
(e) approving
Q14. Ambiguous
(a) unequivocal
(b) perplexing
(c) befuddled
(d) murky
(e) uncertain
Q15. Abhorrence
(a) disgust
(b) admiration
(c) animus
(d) pathos
(e) loathsome
Solutions
S1. Ans.(d)
Sol. Their failure
to attract those outside the formal banking system as customers
S2. Ans.(c)
Sol. The realization
that a large percentage of the American population not reached by
mainstream banks can be trapped
S3. Ans.(c)
Sol. America has the
largest number of banks in the world.
S4. Ans.(e)
Sol. None of the
given statements
S5. Ans.(a)
Sol. None
S6. Ans.(c)
Sol. A discussion
about the prospects of Grameen and microfinance in the US.
S7. Ans.(b)
Sol. Only A
S8. Ans.(e)
Sol. Backing that
borrows receive from other group members.
S9. Ans.(a)
Sol. Avoided
S10. Ans.(a)
Sol. Short
S11. Ans.(a)
Sol. adversary
S12. Ans.(d)
Sol. alert
S13. Ans.(d)
Sol. negative
S14. Ans.(a)
Sol.
unequivocal
S15. Ans.(b)
Sol.
admiration
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