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.
11. Ally
(a) adversary
(b) partner
(c) fence-sitter
(d) almighty
(e) relax
12. Oblivious
(a) apparent
(b) unperturbed
(c) nonchalant
(d) alert
(e) absent-minded
13. Affirmative
(a) obliging
(b) uncivilized
(c) platonic
(d) negative
(e) approving
14. Ambiguous
(a) unequivocal
(b) perplexing
(c) befuddled
(d) murky
(e) uncertain
15. Abhorrence
(a) disgust
(b) admiration
(c) animus
(d) pathos
(e) loathsome
Solutions
1.
Ans.(d)
Their failure to attract those outside
the formal banking system as customers
2. Ans.(c)
The realization that a large percentage of the American population not
reached by mainstream banks can be trapped
3. Ans.(c)
America has the largest number of banks in the world.
4. Ans.(e)
None of the given statements
5. Ans.(a)
None
6. Ans.(c)
A discussion about the prospects of Grameen and microfinance in the US.
7. Ans.(b)
Only A
8. Ans.(e)
Backing that borrows receive from other group members.
9. Ans.(a)
Avoided
10. Ans.(a)
Short
11. Ans.(a)
adversary
12. Ans.(d)
alert
13. Ans.(d)
negative
14. Ans.(a)
unequivocal
15. Ans.(b)
admiration
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