Statement: Should India have only a few large banks instead of numerous banks? Arguments: I. Yes. Larger banks can better withstand intermittent market shocks, protecting depositors. II. No. Post-merger redundancies cause job losses. III. Yes. Consolidation can strengthen the sector and foster healthier competition. Choose the option that best identifies the strong argument(s).

Introduction / Context:Bank-structure policy weighs systemic stability, competition, outreach, and employment. Consolidation can improve resilience but must preserve financial inclusion.

Given Data / Assumptions:

• Larger balance sheets can absorb localized shocks and diversify risk.
• Competition depends on market conduct rules, not only number of firms.
• Merger-driven redundancy is transitional and can be mitigated.

Concept / Approach:We favor arguments that connect structure to depositor protection and sector health over those highlighting manageable transition costs.

Step-by-Step Solution:I: Direct link to depositor safety and systemic resilience—policy central. Strong.II: Job loss is a serious concern but is a transitional, mitigable effect; it does not decisively argue against structural efficiency. Weak as a policy determinant.III: Sector consolidation can reduce fragmentation, enable technology investment, and sharpen competition among well-capitalized players. Strong.

Verification / Alternative check:Many jurisdictions maintain a mix: large banks for scale plus regional/specialized institutions for inclusion—showing I and III capture the core logic.

Why Other Options Are Wrong:Options including II elevate a secondary, mitigable cost; “None” ignores I/III.

Common Pitfalls:Assuming fewer banks always mean less competition; ignoring regulation and digital access.

Final Answer:Only I and III are strong