Read the following passage about public sector banks in India and answer the question. According to the passage, what does the complete absence of any bad advance in a bank actually indicate?

Introduction / Context:
In the given passage on public sector banks, the author explains how banks should handle risk, liquidity and new opportunities. An important line talks about the absence of any bad advance and what that really shows about a bank. The question focuses on interpreting this specific statement and understanding the author's attitude toward extremely safe banking practices.

Given Data / Assumptions:

• The passage states that the absence of any bad advance is no sign of an efficient banking system.
• It further explains that such absence only indicates immense conservatism.
• The author warns that conservatism does not guarantee profit.
• Banks are encouraged to explore new areas and not miss emerging opportunities.
• There must be a balance between liquidity and risk, not complete avoidance of risk.

Concept / Approach:
This is a direct detail question from a reading passage. The correct method is to locate the sentence in the text that mentions “absence of any bad advance” and then read what the author says it indicates. The focus is on comprehension rather than grammar or calculation. A precise match between the passage and an option is required.

Step-by-Step Solution:

Verification / Alternative check:
A quick verification is to note that the passage explicitly rejects the idea that zero bad advances prove efficiency. Instead, the writer insists that such a situation simply shows that the bank has been overly conservative and possibly missing profitable opportunities. Therefore, the only accurate interpretation is that the bank is extremely conservative, not necessarily efficient or profitable.

Why Other Options Are Wrong:

• Option a: A penchant for risks is the opposite of conservatism and contradicts the idea of zero bad advances.
• Option c: Financial independence is not mentioned in connection with bad advances at all.
• Option d: Social commitment is discussed separately in the passage but is not linked to the absence of bad advances.

Common Pitfalls:
Candidates sometimes assume that if a bank has no bad loans it must be efficient or very strong. The author deliberately challenges this assumption. Another frequent error is to infer that such a bank must be deeply committed to social goals, but that association is not made anywhere in the passage. The correct approach is to follow the author's exact words and not impose personal opinions about banking practices.

Final Answer:
Immense conservatism is the correct answer, because the passage clearly states that the absence of bad advances only indicates conservatism rather than efficiency.