English language Quiz 13, based on Reading Comprehension

READING COMPREHENSION Quiz 13

Almost in every competitive exam, there is a section for Reading Comprehension. Reading comprehension is a tricky topic because it takes time and can go wrong if the aspirants do not understand the paragraph. Candidates should devote a substantial amount of time to answering Reading Comprehension Questions. Generally, 5-10 questions are asked from Reading Comprehension in competitive exams. In this article, we have come up with the Reading Comprehension Quiz with a detailed explanation. All types of Reading Comprehension Questions for prelims and mains are included in this Reading Comprehension Quiz. This Reading Comprehension Quiz is completely FREE. Candidates should thoroughly go through this Reading Comprehension Quiz in order to enhance their preparation for upcoming exams.

 

Directions (1-10): Read the passage carefully and answer the questions given below it. Certain words/ phrases have been given in bold to help you locate them while answering some of the questions.

Paragraph 1: The PNB fraud has rekindled the debate on bank privatization, often considered a solution for the poor management in public sector banks. While government ownership of businesses is a bad idea and leads to poor economic outcomes, we should not pin all hopes on privatization as a solution. It is not a panacea for the ills of the banking sector unless accompanied by reforms in banking regulation. The Reserve Bank of India (RBI) has often cited government ownership as an explanation for management failures in PSU banks. There are incentive conflicts when government owns banks, and this affects the efficiency of capital allocation. However, this does not explain why the RBI cannot hold the PSU banks accountable for issues such as capital adequacy, fraud control or appropriate reporting of financial statements.

Paragraph 2: It is true that the RBI does not have all the powers over PSU banks that it has over private sector banks, such as the power to revoke a banking license, merge a bank, shut down a bank, or penalize the board of directors. However, Section 51 of the Banking Regulation Act, 1949 enables the RBI to exercise some powers over PSU banks, which apply notwithstanding any special provision governing PSU banks in other laws. The lack of some powers of RBI over PSU banks is balanced, to some extent, by the right of RBI to appoint a director on the board of a PSU bank (bank nationalization laws and the law governing State Bank of India). Unlike private sector banks, this director must have expertise and experience in regulation and supervision of banks, a skill available only with RBI. This allows the RBI to keep a PSU bank under constant supervision.

Paragraph 3: Banks can earn more fees and make higher profits by selling financial products with high commissions, as opposed to the appropriate financial products, to consumers. If the management of a private sector bank is incentivized to increase income, they will try to sell insurance products (which may carry commissions equalling the entire premium for one year) rather than fixed deposits. The objective of banking regulation is to make the management of banks, both private and public, take decisions which they would not normally take to protect depositors and consumers. Since the incentive structures of the management of private and public sector banks are different, they will take different types of decisions. But in both cases, the decisions may adversely affect the consumers and the depositors.

Paragraph 4: Privatization of banks, with the same level of regulatory capacity and the same quality of regulatory oversight, may only trade one type of banking management failure (frauds, poor system controls) with other types of failures (underreporting of NPAs, misselling of financial products). There is no evidence that the RBI is better at regulating private sector banks and no reason to believe that bank privatization will cure the ills of banking regulation.

Paragraph 5: Doing the right thing for the wrong reasons is dangerous. If bank privatization is the only reform that is undertaken in response to the current crisis in the banking system without fixing fundamental problems in banking regulation, the crisis will keep recurring. This will then delegitimise the privatization move. The consequent backlash may undo many good reforms which have reduced the role of state in commerce and redirected it towards public goods like regulation.

  1. Which of the following does not hold true in the context of the paragraph 1?

(a) RBI held government responsible for the management failure in PSU banks.
(b) Privatisation cannot be the solution of failures unless accompanied by reforms.

(c) RBI need to look after other issues as well like capital adequacy, fraud control.
(d) Under Government ownership, capital allocation is the major issue in the PSU banks.
(e) The RBI stake in PSU banks is larger than that of the government.

Answer & Explanation
Ans. e

Exp. Sentence (e) cannot be inferred from the paragraph 1.

  1. According to the Paragraph 2, In what way (s) does RBI can evade the situation of fraud in PSU banks?

 

(a) RBI, being a board member, can keep a check on all the activities of the PSU banks.

(b) RBI can abrogate the license of banks which are engaged in fraudulent activities.
(c) RBI can recruit an experienced and specialized director of a PSU bank.
(d) Both (a) and (c)
(e) All are correct

Answer & Explanation
Ans. d

Exp. RBI due to lack of powers cannot take various decisions but the power of recruiting a director enables RBI to keep PSU banks under constant supervision. Hence sentences (a) and (c) are correct.

  1. What is/are the right way (s) of generating profit for the bank?

(I) By taking decisions to protect the depositors and consumers.
(II) By proper executing the banking regulation.
(III) By increasing saving accounts.

(a) Only (I)
(b) Only (II)
(c) Both (II) and (III)
(d) Both (I) and (III)
(e) All are correct

Answer & Explanation
Ans. e

Exp. With reference to the paragraph 3, All of the given statements are correct. “…rather than fixed deposits. The objective of banking regulation is to make the management of banks, both private and public, take decisions which they would not normally take to protect depositors and consumers.”

  1. Which of the following can be inferred from paragraph 5 which forms a connection with paragraph 4?

(a) The RBI can control the lending policy of PSU banks, including determining maximum exposure, and the purpose of lending.
(b) Non- performing assets and misspelling of financial products are difficult to control by privatization.
(c) Privatization may solve other problems in the economy but it is not a solution for regulatory weaknesses.

(d) RBI is not good at regulating private sector banks.

(e) None of these

Answer & Explanation
Ans. c

Exp. The two paragraphs give one conclusion that Privatisation is not a panacea for the ills of the banking sector. Hence option (c) is the correct choice.

  1.  How is it correct to say that Privatisation of PSU banks cannot resolve the issue completely?

(a) Regulation of Private sector banks also needs improvement.
(b) Privatising the banks has its limited benefits.
(c) Unless fundamental problems of banks are resolved, Privatisation will not fix the issue.
(d) Deep Reforms are needed to be implemented too.
(e) All of the above

Answer & Explanation
Ans. e

Exp. In the context of the passage, all the given sentences are correct.

  1. What is the author’s tone in the given passage?

(a) Formal as the passage highlights the general event of the passage.
(b) Analytical as the author has provided the details of the issue.
(c) Cynical as the author is disapproving the privatization of PSU bank.
(d) Sarcastic as the after effects of Privatisation have been clearly described.
(e) Ironic as the self-explanatory views has been mentioned by the author.

Answer & Explanation
Ans. b

Exp. The tone of the author is Analytical as Deep analysis of Privatisation of PSU banks has been provided by the author in the passage.

Directions (7-8): Which of the following alternatives among the five options provides the most similar meaning(s) of the word given in BOLD as used in the passage?

 

  1. Rekindled

(A) revive
(B) quench
(C) captious
(D) afflictive

(a) Only (A)
(b) Only (B)
(c) Both (B) and (C)
(d) Both (C) and (D)
(e) All are correct

Answer & Explanation
Ans. a)

Exp. Rekindled means revive (something lost or lapsed). Hence it has the same meaning as revive.

  1. Panacea

(A) ordain

(B) inundate
(C) proximate
(D) extant

(a) Only (A)
(b) Only (B)
(c) Both (B) and (C)
(d) (B), (C) and (D)
(e) None of these

Answer & Explanation
Ans. e

Exp. Panacea means a solution or remedy for all difficulties or diseases.

Directions (9- 10): Which of the following alternatives among the five options provides the most opposite meaning(s) of the word given in BOLD as used in the passage?

  1. Adversely

(A) revoke
(B) deplore
(C) favourably
(D) affirmatively

(a) Only (A)
(b) Only (B)
(c) Both (B) and (C)
(d) Both (C) and (D)
(e) All are correct

Answer & Explanation
Ans. d

Exp. Adversely means in a way that prevents success or development; harmfully or unfavourably. Hence it has the opposite meaning to favourably and affirmatively.

  1. Oversight

(A) reluctant
(B) reticent
(C) covet
(D) inimitable

 

(a) Only (D)
(b) Only (B)
(c) Both (B) and (C)
(d) Both (A) and (D)
(e) None of these

Answer & Explanation
Ans. e

Exp. Oversight means the action of overseeing something.

English Grammar Rules

Read More The Hindu Editorial Vocab

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