Which one of the following is the most logical and rational inference that can be made from the above passage?

Correct Option: (c) India lacks the institutional mechanism to deal with the failure of banks.

The passage highlights that bank credit to the industrial sector is shrinking, and traces the root cause to incomplete reforms from 1991. Specifically, it notes that an institutional change like setting up a resolution corporation for banks was omitted, leading to a situation where weak, loss-making banks cannot be shut down because there is no proper system or mechanism to do so. This directly points to the absence of institutional mechanisms to handle bank failures in India. Therefore, option (c) is the most logical and rational inference. Option (a) is too broad and sweeping. Option (b) misinterprets the specific institutional gap. Option (d) suggests an alternative that is not discussed in the passage.