UPSC Prelims 2011 · Question 5 of 100
UPSC Prelims 2011 question on Teaser Loans
- ExamUPSC CSE
- Year2011
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicBanking
- DifficultyMedium
- TypeStatement
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 defaults in future.
2. In India, the teaser loans are mostly given to inexperienced entrepreneurs to set up manufacturing or export units.
Which of the statements given above is/are correct?
Show answer
Answer: A. 1 only
Verdict
Correct statements: I only → Option (a).
Statement by statement
Statement 1 – Correct: Teaser loans are linked to sub-prime lending risks.
Statement 2 – Incorrect: Teaser loans are generally housing or retail loans, not mainly for inexperienced entrepreneurs.