Statement–Argument (Fewer, Larger Banks vs Many Smaller Banks): Statement: Should India have a few large banks instead of numerous smaller ones? Arguments: I) Yes, larger banks are better able to absorb intermittent market shocks and protect depositors. II) No, mergers will render many employees redundant and cause job losses. III) Yes, consolidation will strengthen the sector and foster healthier competition. Choose the strongest evaluation.

Introduction / Context:Banking structure affects financial stability, efficiency, and inclusion. Consolidation can create diversification benefits and scale, but job impacts require mitigation through retraining and attrition planning.

Given Data / Assumptions:

• Larger balance sheets can better withstand shocks.
• Competition may improve if weak, fragmented players are rationalised.
• Employment displacement is a transitional effect, not a decisive sectoral objective.

Concept / Approach:Strong arguments should focus on systemic objectives (stability, competition). I and III do so. II cites an important social cost but not a policy-ending reason; it invites mitigation rather than rejection.

Step-by-Step Solution:I: Direct link to depositor protection and prudential strength ⇒ strong.II: Job loss is material but addressable with phased integration ⇒ weaker.III: Consolidation can reduce duplication and enable robust competition among fewer, stronger entities ⇒ strong.

Verification / Alternative check:Many jurisdictions have pursued consolidation with safeguards—consistent with I and III.

Why Other Options Are Wrong:Including II overstates a mitigable transition cost; “None” ignores clear sectoral benefits.

Common Pitfalls:Equating temporary employment effects with structural unsoundness.

Final Answer:Only I and III are strong.