ibps-so 2016 · Question 367 of 394

A cultivator who has drawn a short-term crop loan of ₹1.60 lakh against his Kisan Credit Card for the kharif season repays the whole of it on the due date, within one year of the date of drawal, and asks the branch what interest will be debited to his account for the year. The short-term crop loan he has taken is within the ceiling up to which the concessional arrangement operates, and he has met every condition of prompt repayment attached to it. The eld o cer explains that the loan is priced at a benchmark rate to begin with, that the lending institution is compensated for part of it and the promptly repaying borrower is given the rest as an incentive, and that the borrower who repays on the due date is therefore left bearing an e ective rate well below the benchmark. The interest that will be debited to the borrower for the year is

1. A₹4,800
2. B₹8,000
3. C₹9,600
4. D₹6,400Correct
5. E₹11,200