Which one of the following statements best reflects the most logical, rational and practical suggestion implied by the passage given above?
Answer & explanation
Answer: (d) Indian banking system requires structural reforms as a long-term solution for bad loans problem.
Bad-debt resolution and recapitalisation help, but the passage calls them only part of the solution: unless systemic reforms tackle unsustainable lending, future credit cycles will stress the banks again. The suggestion is structural reform as the long-term remedy.
- ✗ (a) Close monitoring by the Central Government is one possible reform, but the passage names no agency or method — this is too specific.
- ✗ (b) The passage worries about reckless lending; pushing banks to lend more through low rates works against that concern.
- ✗ (c) Mergers are never mentioned, and 'alone is the long-term solution' is too absolute.
- ✓ (d) 'Unless there are systemic reforms that address the problem of unsustainable lending, future credit cycles will continue to stress the banking system.'
Remember · When a passage ends 'unless X, the problem continues', X is the suggestion — pick the option that restates it without adding specifics.
Question and answer: UPSC's official GS Paper II (2021, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·