Detailed Explanation:

Answer: Option 3 — 2 only

This question evaluates statements about public sector banking reforms in India. Statement 1 is incorrect as capital infusion has not been steady but rather sporadic and need-based. Statement 2 is correct as the merger of SBI associate banks with the parent State Bank of India was indeed carried out as a reform measure.

❌ Statement 1 – Incorrect: Capital infusion into public sector banks by the Government has not been steady over the last decade. It has been sporadic and need-based, with significant infusions through recapitalisation bonds in certain years (especially post-2017) when banks faced high NPAs, rather than a steady increase throughout the decade.

✅ Statement 2 – Correct: As part of public sector banking reforms, the merger of five associate banks and Bharatiya Mahila Bank with State Bank of India was completed in 2017, creating a stronger banking entity and improving operational efficiency.

📝 Short Notes: Public Sector Banking Reforms in India

• Bank Recapitalisation: Government infuses capital into PSBs through budgetary support and recapitalisation bonds to strengthen their capital base and meet Basel III norms.
• SBI Merger (2017): Five associate banks (State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad, State Bank of Patiala) and Bharatiya Mahila Bank were merged with SBI, creating India's largest bank with improved global ranking.
• Other PSB Mergers: In 2019-20, 10 PSBs were consolidated into 4 banks, reducing the total number of PSBs from 27 (in 2017) to 12 (by 2020).
• 4R Strategy: Recognition (of NPAs), Resolution (through IBC), Recapitalisation, and Reforms for PSB strengthening.
• Prompt Corrective Action (PCA): Framework by RBI to monitor weak banks based on capital adequacy, asset quality, and profitability parameters.
• Bank Board Bureau: Established in 2016 to improve governance and professionalism in PSBs through transparent board appointments and performance evaluation.