GyanGramWhy is the offering of “teaser loans” by commercial banks a cause of economic concern? 1. The teaser loans ar…
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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 subprime 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?
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• Correct Answer: C
• Teaser loans are subprime lending with artificially low initial rates, exposing banks to future defaults.
• In India, they were mainly offered in the housing sector, not to entrepreneurs.
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