With which of the following statements would the author most likely agree I One time settlement...........

English ( Master) Reading comprehension (P)

The government’s move to infuse upfront an additional capital of Rs 70,000 crore into public sector banks (PSBs) is welcome. The promised removal of the Damocles’ sword of punitive investigation of any banking decision hanging over the heads of bankers today will help banks lend the additional liquidity leveraging this capital would enable.

The moves to support non-banking financial companies (NBFCs) — such as enhancing additional liquidity support to housing finance companies to Rs 30,000 crore by National Housing Bank from Rs 20,000 crore and co-origination of loans by PSBs jointly with NBFCs that are reeling under a liquidity crunch — will provide a booster for fresh loans to the MSME sector.

A transparent one-time settlement policy being provided by banks to benefit MSMEs and retail borrowers in settling their overdues is pragmatic. But banks also must acquire the expertise to assess MSME loan viability and invest in data mining.

Making banks link their lending rates to the repo rates will help better transmission of monetary policy. But for this to work without impairing bank financial health, multiple structural rigidities in the system must be removed. Public sector pre-emption of the bulk of household financial savings must end, for the bond market to really take off to provide longer-term funds for infrastructure projects.

Steps such as further development of the credit default swap markets, facilitating increased trading for price discovery, and establishing an organisation to provide credit enhancement for infrastructure and housing projects make eminent sense, as does onshoring the offshore rupee derivative markets.

A coherent policy of managerial reform, including of remuneration, at public sector banks must accompany the measures announced, for them to take effect.

With which of the following statements would the author most likely agree?

I. One-time settlement policy that will benefit MSMEs is impractical for banks and is unwise.

II. Banks have not yet developed the required proficiency in judging the sustainability of MSME loans.

III. Banks have made huge investments in data mining.

Only I

Only II

Only I and II

Only I and III

All I, II and III

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Explanation:

Statement I : One-time settlement policy that will benefit MSMEs is impractical for banks and is unwise.

The one-time settlement policy has been stated as being pragmatic which means that it is practical and sensible. Hence, statement I is invalid.

Statement II : Banks have not yet developed the required proficiency in judging the sustainability of MSME loans.

The author is urging banks to acquire the expertise of assessing MSME loan viability. This implies that he is likely to believe that banks have not yet mastered this skill. Hence, statement II is valid.

Statement III : Banks have made huge investments in data mining

The author has urged banks to invest in data mining. If he believed that the banks were already doing so then he would not have given such an advice. This, hence, makes statement III invalid.

Evidently, option B is the correct answer.