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Mr. Madhukar worked for 5 years in a multi-commodity trading company after graduating from a reputed B-School. He then resigned from his job and started an online garment export business. For his business Madhukar used Rs. 8,00,000/- of his own savings and borrowed Rs. 12,00,000/- from a private sector bank in April, the beginning month of the financial year. Meanwhile, RBI eased the repo rate in May and banks passed on the benefits to the borrowers. As a result, Madhukar borrowed an additional Rs. 9,00,000/- after 4 months at an interest rate that is 10% lower than his earlier borrowing interest rate. If the total interest paid by Madhukarat at the end of that year on both the loans is Rs. 1,39,200/-, what is the interest rate per annum on first borrowing?

Mr. Madhukar worked for 5 years in a multi-commodity trading company after graduating from a reputed B-School. He then resigned from his job and started an online garment export business. For his business Madhukar used Rs. 8,00,000/- of his own savings and borrowed Rs. 12,00,000/- from a private sector bank in April, the beginning month of the financial year. Meanwhile, RBI eased the repo rate in May and banks passed on the benefits to the borrowers. As a result, Madhukar borrowed an additional Rs. 9,00,000/- after 4 months at an interest rate that is 10% lower than his earlier borrowing interest rate. If the total interest paid by Madhukarat at the end of that year on both the loans is Rs. 1,39,200/-, what is the interest rate per annum on first borrowing? Correct Answer 8 Percent

Related Questions

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Which of the following statements are true in context of scheduled banks?
1. All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are Scheduled Banks.
2. These banks comprise Scheduled Commercial Banks and Scheduled Co-operative Banks.
3. Scheduled Commercial Banks in India are categorized into five different groups - SBI, Nationalised Banks, Regional Rural Banks, Foreign Banks and Other Indian Scheduled Commercial Banks in the private sector.
4. Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled Urban Co-operative Banks.
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Statement : Many private sector banks have reduced interest rate on housing loans in comparison to public sector banks.

Courses of Action :
I. The case should be raised before the regulatory authority for investigation by the public sector banks as they cannot follow such reduction.
II. Public sector banks must adopt such policy to remain in competition.
III. The public sector banks should advertise their special feature repeatedly so that they do not lose their future customers.
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