Is your DREAM to get selected in SBI Clerk 2020 recruitment? Well, then you must speed up your preparation as the Main exam which is the final step towards selection will soon be announced. So, students should utilize this time intelligently. The English Language is one of the subjects you’ll need to deal with and to help you keep your preparation up to the mark, here we provide you with a questionnaire of English Language to crack SBI Clerk Main. For other subjects, you can check the SBI Clerk Mains Study Plan.Directions (1-8): Read the given passage and answer the following questions.
The present government’s much-hyped, post-COVID-19 relief and recovery package has disappointed many. It provides little by way of additional budgetary resources to halt and reverse the economic and social collapse that the pandemic and the response to it has triggered. Most estimates place the additional fiscal allocation implicit in the proposals at about a tenth of the size of the package, which the government claims amounts to around 10% of GDP.
In its effort to tote up a 10% of GDP relief-cum-stimulus figure, the government has relied heavily on measures aimed at pushing credit to banks, non-banking financial companies (NBFCs) and businesses big and small, which are expected to use borrowed funds to lend to others, make payments falling due, compensate employees even while under lockdown, and otherwise spend even while not earning. The thrust is to get the Reserve Bank of India (RBI) and other public financial institutions to infuse liquidity and increase lending by the financial system, by offering the latter capital for longer periods at a repo or policy interest rate that has been cut by more than a percentage point to 4%.
There was a hint that this would be the thrust when the Prime Minister in his speech calling for a “self-reliant India” identified, besides land, labour and laws, “liquidity” as among the areas of focus of the package. In economic and business parlance, liquidity refers to ease of access to cash — a liquid asset is one that can be easily sold for or replaced with cash, and a liquid firm or agent is a holder of cash, a line providing access to cash, or assets that can be easily and quickly converted to cash without significant loss of value. In periods of crisis, individuals, small businesses, firms, financial institutions and even governments tend to experience a liquidity crunch. Relaxing that crunch is a focus of the government’s crisis-response package. In keeping with that perspective, it gives a much larger role to enhancing liquidity than it does either to direct transfers to the poor and precariously employed workers devastated by the crisis, or to spending to ensure that micro- and small businesses would remain viable and along with medium and big businesses, would ride a demand revival when the lockdown ends.
The main intermediaries being enlisted for the task of transmitting liquidity are the banks, with NBFCs constituting a second tier. Among the first steps taken by the RBI was the launch of special and ‘targeted’ long term repo operations (TLTROs), which allowed banks to access liquidity at the repo rate to lend to specified clients. One round of such operations, which was relatively more successful, called for investment of the cheaper capital in higher quality investment grade corporate bonds, commercial paper, and non-convertible debentures. That funding allowed big business, varying from Reliance and L&T to financial major HDFC, to access cheap capital to substitute for past high-cost debt or finance ongoing projects. There is little evidence that this is triggering new investment decisions.
The second round was geared to saving NBFCs, whose balance sheets were under severe stress even before the COVID-19 strike, because they were finding it difficult to roll over the short-term debt they had incurred to finance longer term projects, including lending to small and medium businesses, housing and real estate. Banks were wary about lending to these NBFCs, because of fears that their clients could default in amounts that would bring the viability of these institutions into question. Those fears were confirmed when Franklin Templeton announced that it was shutting down six of its funds, setting off redemption requests across the NBFC sector, as investors rushed to take back their money, at a time when the ability of these institutions to mobilise funds to meet these demands had been impaired. Not surprisingly, banks were unwilling to respond when liquidity was infused to target lending to the NBFCs.
Q1. Why the author referred the recovery package as a disappointment for many in the given passage?
(i) It does nothing to stop and reverse the social and economic collapse
(ii) Size of the package was not in accordance with what major economies have released
(iii) Infusion of liquidity in the NBFC sector was far away from what was being expected
(a) Both (ii) and (iii)
(b) Only (i)
(c) Only (ii)
(d) Both (i) and (ii)
(e) Both (i) and (iii)
Q2. How government planned to use the stimulus package to revive the falling economy?
(a) Push credit to banks, NBFCs and Businesses of all size
(b) It relied on various measures as suggested by RBI
(c) The government followed the strategy framed by the committee
(d) It totaled up the 12% of GDP for the relief package
(e) All of the above
Q3. What is the thrust or principle purpose of stimulus package as mentioned in the given passage?
(a) To enable RBI and financial institutions for infusing liquidity
(b) Enhance lending capacity of the financial system
(c) Offer capital to RBI for long terms
(d) Giving capital at minor repo rate
(e) All of the above
Q4. What does liquidity refers to in economic and business terms?
(a) Transferring cash to accounts
(b) Enhancing cash limit of card holders
(c) Availability of cash
(d) Liquidizing the cash for expenditure
(e) All of the above
Q5. Which of the following are true about Liquid asset: Liquid firm?
(a) Easily convertible cash for schemes: Cash holder providing liquidity
(b) Assets to convert into cash: Banks and RBI providing funds
(c) Cash needed for Govt. expenses: Government providing cash to people
(d) Easily sold or replace with cash: Holder of cash to provide cash accessibility
(e) None of these
Q6. How government relaxes liquidity crunch as mentioned in the given passage?
(a) By providing ample support to startup ecosystem to make them self-sustainable
(b) It spends to ensure viability of MSMEs and maintain their workforce
(c) It prioritizes cash flow by direct cash transfer to the poor and workers
(d) Both (b) and (c)
(e) All of the above
Q7. What was one of the first steps taken by RBI to transmit liquidity?
(i) Shortlisting banks and NBFCs for maintaining the cash flow
(ii) Launching of TLTROs (Targeted long term repo operations)
(iii) Bringing in line the banks with higher liquidity capacity
(a) Only (i)
(b) Only (ii)
(c) Only (iii)
(d) Both (i) and (iii)
(e) All (i), (ii), and (iii)
Q8. Which of the following statement is false about Targeted Long Term Repo Operations?
(a) It brought liquidity accessibility to the banks at the repo rate for lending to specific clients.
(b) It let big businesses to get cheap capital and substitute the same for high-cost debt or current financial projects.
(c) It brought all the financial institutions on ground level to benefit from the relief package of the government.
(d) It called for cheaper capital investment in high quality investment grades.
(e) All are correct
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