Decision reasoning – banking interest rates and competitive response Statement: Many private sector banks have reduced the interest rate on housing loans compared to public sector banks. Courses of Action to evaluate: I. Raise the case before the regulator for investigation by public sector banks since they cannot follow such reduction. II. Public sector banks must adopt a similar policy to remain competitive. III. Public sector banks should repeatedly advertise their special features so they do not lose future customers. Which course(s) of action logically follow(s) from the statement?

Introduction / Context:
This is a Courses of Action problem from logical reasoning. We are given a factual situation about interest-rate competition between private sector banks and public sector banks. We must judge which proposed actions are pragmatic and logically connected to the stated problem without introducing assumptions beyond the statement.

Given Data / Assumptions:

• Private sector banks have reduced housing-loan interest rates.
• Public sector banks currently have comparatively higher rates.
• No illegality or regulatory breach is stated.
• Objective is to avoid loss of customers by public sector banks.

Concept / Approach:
In Courses of Action, select responses that are feasible, ethical, and directly aim to address the stated issue. Avoid actions based on unwarranted allegations or those that presume facts not in the statement.

Step-by-Step Solution:
Evaluate I: Asking the regulator to investigate public banks because they “cannot follow such reduction” presumes illegality or incapacity. The statement gives no hint of any violation. Hence I is not warranted.Evaluate II: Matching the competitive pricing (if feasible) is a direct, logical response to retain market share. II is reasonable.Evaluate III: Differentiation via advertising unique strengths (service, safety, features) is also a legitimate response to competition. III is reasonable.Since II and III are alternative strategies, at least one of them should be taken; the test’s intent is to mark them as mutually exclusive “either” choices rather than both together as mandatory.

Verification / Alternative check:
Competition can be met either by price moves or by value communication. Both are acceptable paths; requiring both simultaneously is not necessary.

Why Other Options Are Wrong:

• All follow / I-related combos: I is based on an assumption of wrongdoing and is not supported.
• “None”: II or III clearly offers a logical course.

Common Pitfalls:
Assuming a regulatory violation without evidence, or assuming only price cuts solve competition.

Final Answer:
Only either II or III follows