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 statements given above is/are correct?

[UPSC Civil Services Exam – 2011 Prelims]

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 or 2


Answer: (a)        

Explanation:

  • Teaser loans are a type of loan that initially offers a lower interest rate for the first few years before increasing the rates later on.
  • SBI introduced the concept of teaser rates for home loans in November 2009.
  • These loans are associated with subprime lending, which involves lending to borrowers with a low credit rating and a higher risk of default.
  • However, it is important to note that teaser loans are not limited to home loans and can be extended to entrepreneurs as well.

Consider the following statements:                                                                   The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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Consider the following statements:                                                         The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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