UPSC General Studies Solved Paper - General Studies-2011

  • question_answer
    Why is the offering of 'teaser loans' by commercial banks a cause of economic concern?
    1. The 'teaser loans' are considered to be an aspect of sub-prime lending and banks may be exposed to the risk of defaulters in future.
    2. In India, the 'teaser loans' are mostly given to inexperienced entrepreneurs to set up manufacturing or export units.
    Which of the statement(s) given above is/are correct?

    A)  Only 1             

    B)  Only 2

    C)  Both 1 and 2                

    D)  Neither 1 nor 2

    Correct Answer: A

    Solution :

    Exp. [a] 'Teaser loans', which has a feature of lending at lesser premium interest rates in the beginning and later incrementing them heftily after a certain period, are at present given to credit worthy home buyers.                                             

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