NABARD Assistant Manager Grade A (RDBS) · India · National Bank for Agriculture and Rural Development
Original practice questions written to the published syllabus · not past papersThe risks farmers and agribusinesses face and the tools to manage them: insurance, hedging and sound credit policy.
In the exams: agricultural master's entrance examinations, crop insurance (heavy); agricultural economics PhD entrance and fellowship examinations, risk and insurance (heavy); agricultural field officer recruitment in banking (heavy); agricultural development bank officer recruitment (present)
How our questions for NABARD Assistant Manager Grade A spread across the units of Agri Risk Management & Insurance. Difficulty: 2 easy, 11 medium, 7 hard.
| Credit risk in bank lending | 10 | |
| Publicly supported area-yield and weather-index crop insurance | 5 | |
| Livestock insurance | 2 | |
| Risk diffusion strategies | 1 | |
| History of crop insurance | 1 | |
| Hedging with futures and options | 1 |
Choose an answer, then open the working. Each explanation says why the right answer is right and why the others are not.
For a main-season food crop, the actuarial premium rate discovered by bidding is 12% and the sum insured is 60,000 currency units per hectare. The farmer pays 2% and the subsidy is shared equally between the national and regional governments. What is the national government's share of the subsidy per hectare?
A. 3,000 currency units
Total premium = 0.12 x 60000 = 7,200 currency units. Farmer pays 2% = 1,200 currency units. Subsidy = 6,000 currency units, shared equally, so the national government pays 3,000. Splitting the full premium without first deducting the farmer's share gives 3,600 currency units; 5,400 currency units assumes a 90:10 split.
Why do governments in most countries subsidise crop insurance premiums heavily?
B. Because correlated risk and high delivery costs make unsubsidised premiums too high for most farmers
Drought and floods hit many farms at once, so insurers need large reserves and reinsurance, and serving small farms is costly; unsubsidised premiums deter most smallholders. WTO rules place limits on some subsidies; they do not require insurance.
Which statement correctly contrasts area-yield index insurance and weather-index insurance?
D. Area-yield schemes measure yields by crop cuts and add individual checks; weather-index schemes pay on station data
Area-yield schemes measure actual area yields and add farm-level assessment for localised and post-harvest losses; weather-index schemes are parametric. In India, for example, PMFBY and RWBCIS have the same farmer premium shares and both are open to borrowers and non-borrowers.
For a death claim on an insured buffalo, which set of documents is typically required?
A. Claim form, ear tag, vet's death certificate, post-mortem report if required, and photographs
Livestock claims turn on proving the identity and cause of death of the insured animal. Crop and weather documents belong to crop insurance.
A loan for sugarcane, a long-duration crop, becomes an NPA when overdue for:
D. One crop season
Long-duration crops (crop season longer than one year) follow the one-crop-season rule; short-duration crops the two-crop-season rule.
A poultry project generates 180,000 currency units a year of cash available for debt service, and annual principal plus interest due is 150,000. The debt service coverage ratio is:
B. 1.2
DSCR = cash available for debt service / debt service due = 180,000 / 150,000 = 1.2. The inverse (0.83) is a common slip. A DSCR above 1 means the project can meet its debt service; lenders usually want a margin above 1. 0.2 is the surplus over debt service as a share of it ((180,000 − 150,000) / 150,000); 120 is the ratio written as a percentage.
A government interest-subsidy scheme lends short-term crop loans at 7% a year and gives farmers who repay promptly a further 3% incentive. What is the effective rate for a prompt payer?
D. 4% per annum
Effective rate = 7% − 3% prompt-repayment incentive = 4% a year. Adding the incentive (10%) reverses its direction; 3% is the incentive itself. India runs a scheme of this design; ceilings and rates are set by government and should be checked each year.
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