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Statements: The Reserve Bank of India has recently put restrictions on a few small banks in the country. The small banks in the private and co-operative sector in India are not in a position to withstand the competition of the bigger banks in the public sector.

1. Statement I is the cause and statement II is its effect
2. Statement II is the cause and statement I is its effect
3. Both the statements I and II are independent causes
4. Both the statements I and II are effects of independent causes

Correct answer: Statement II is the cause and statement I is its effect

Solution

If small banks are unable to compete with larger public-sector banks, they may become financially vulnerable. That can lead the RBI to impose restrictions, making statement II the cause and statement I the effect.

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