SSC CGL 2025 Tier-II · Paper-I, 19 January 2026 · English Language and Comprehension · Question 39 of 150

We transcribed this text from the pictures of a candidate's response sheet for this paper; the answer is the key SSC marked with a green tick on that sheet. Solution last reviewed 11 September 2026.

Read the following passage carefully and answer the questions based on the passage:
"Bank failures raise serious concerns about supervisory oversight." The case studies of Credit Suisse and Silicon Valley Bank highlight the deficiencies in supervisory supervision. In many instances, supervisors are hesitant to come into conflict with bank management when weaknesses are identified, preferring to do nothing rather than take corrective action at a point in time when key issues are building into a problem.
Regulators must adopt an attitude change in which they place more emphasis on the results rather than the details. Overemphasis on trivial matters might lead regulators to overlook more fundamental issues, such as whether financial institutions have adequate capital in case of a shock. Regulating requirements must be simplified. Complex regulation requirements in relation to capital may overlook systemic risk in their approaches when stress tests result in activities gravitating towards less heavily regulated institutions in the non-bank sector.
Improved supervisory and bank communications would promote better supervision as a tool for managing risk. Recommendations include being up front about supervisory goals, openness to change within the bank organization, and increased transparency in supervisory contracts as a way of promoting swift problem resolution. These would aid shareholders as well as the overall economy. In conclusion, rather than pursuing a micro-management strategy, a move towards a clearly defined regulation that supports positive incentives is what is needed to ensure that banks behave within frameworks that promote financial stability.

What would "positive incentives" do for the banking system?

(a)Make bank rules much more complicated and harder to follow.
(b)Bring back micro-management and focus on tiny details.
(c)Stop banks and regulators from talking to each other often.
(d)Help banks behave in a way that keeps the economy stable.

Answer

Why

Correct — D. The phrase comes from the conclusion: 'a move towards a clearly defined regulation that supports positive incentives is what is needed to ensure that banks behave within frameworks that promote financial stability.'

To ensure that gives the purpose: banks behaving within frameworks that promote financial stability.

Option (d) puts that purpose in plain words: help banks behave in a way that keeps the economy stable.

Why the others are wrong

(a)
Make bank rules much more complicated and harder to follow. — The passage wants rules simplified: 'Regulating requirements must be simplified'. More complicated rules are what it argues against.
(b)
Bring back micro-management and focus on tiny details. — The conclusion rejects micro-management in so many words: 'rather than pursuing a micro-management strategy'. Incentives replace it; they do not bring it back.
(c)
Stop banks and regulators from talking to each other often. — Paragraph three calls for more communication: 'Improved supervisory and bank communications would promote better supervision'. Cutting contact reverses it.

Concept

A question about what a phrase would do asks for its purpose, and purpose markers find it: to ensure that, so that, in order to.

Here the conclusion names the aim outright. Incentive-based regulation exists 'to ensure that banks behave within frameworks that promote financial stability'.

Each wrong option reverses one of the passage's recommendations: simpler rules, less micro-management, better communication.

Key facts

An incentive is something that encourages a person or organisation to act in a certain way.
'To ensure that' introduces a purpose clause.
The passage recommends simpler rules, less micro-management and better supervisor-bank communication.

Study next

Purpose clauses: to ensure that, so that, in order toIncentives versus detailed rules as tools of regulationSummarising a passage's recommendations before answering

Common traps

Answering from the word 'incentives' alone instead of reading the 'to ensure that' clause after it.
Missing that option (b) brings back the micro-management the conclusion rejects.

The same concluding sentence decides 19 Jan 2026, 11:00 AM, English Q.36, which asks for the logic of the conclusion: a move from micro-management to results.

Related PYQs

No directly related past PYQ was found.

Read the following passage carefully and answer the questions based on the passage:
"Bank failures raise serious concerns about supervisory oversight." The case studies of Credit Suisse and Silicon Valley Bank highlight the deficiencies in supervisory supervision. In many instances, supervisors are hesitant to come into conflict with bank management when weaknesses are identified, preferring to do nothing rather than take corrective action at a point in time when key issues are building into a problem.
Regulators must adopt an attitude change in which they place more emphasis on the results rather than the details. Overemphasis on trivial matters might lead regulators to overlook more fundamental issues, such as whether financial institutions have adequate capital in case of a shock. Regulating requirements must be simplified. Complex regulation requirements in relation to capital may overlook systemic risk in their approaches when stress tests result in activities gravitating towards less heavily regulated institutions in the non-bank sector.
Improved supervisory and bank communications would promote better supervision as a tool for managing risk. Recommendations include being up front about supervisory goals, openness to change within the bank organization, and increased transparency in supervisory contracts as a way of promoting swift problem resolution. These would aid shareholders as well as the overall economy. In conclusion, rather than pursuing a micro-management strategy, a move towards a clearly defined regulation that supports positive incentives is what is needed to ensure that banks behave within frameworks that promote financial stability.