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Difficulty: HardInference and Logical Deduction

Read the following passage carefully:

Under the 2026 Agrarian Credit Accessibility Norms, state micro-finance institutions are authorized to deploy automated algorithmic scoring tools to evaluate loan eligibility for smallholder farming cooperatives. The framework stipulates that credit eligibility cannot be denied solely on the basis of an algorithmic rating if the applicant cooperative holds a verified history of non-defaulting debt settlement over the preceding five consecutive years with any state-recognized land development bank. However, for newly registered cooperatives lacking a five-year credit history, the algorithmic rating serves as the sole binding determinant for loan approvals. Furthermore, the norms specify that any financial institution failing to upload quarterly audit logs of its algorithmic scoring parameters to the central regulatory portal will have its authorization to disburse state-subsidized credit suspended immediately, regardless of its historical compliance record.

Based on the passage above, which of the following statements must be logically true?

  1. A newly registered cooperative lacking a five-year credit history with a state-recognized land development bank cannot secure a loan under these norms if its automated algorithmic rating is unfavorable.Answer
  2. B
    Established farming cooperatives with five consecutive years of clean debt settlement are completely exempt from undergoing algorithmic evaluation during their loan application process.
  3. C
    A financial institution that maintains a flawless historical compliance record will receive a grace period before its credit disbursement authorization is suspended for missing an audit log submission.
  4. D
    Automated algorithmic scoring tools provide a more objective assessment of smallholder creditworthiness than traditional land development bank reviews.

Answer

A newly registered cooperative lacking a five-year credit history with a state-recognized land development bank cannot secure a loan under these norms if its automated algorithmic rating is unfavorable.
The passage states that for newly registered cooperatives without a five-year history, the algorithmic rating is the sole binding determinant for loan approvals. Therefore, if the rating is unfavorable, the loan cannot be approved, making this statement logically necessary.

Step-by-Step Solution

1
Analyze the conditions for newly registered cooperatives in the passage.
Identified the premise: 'for newly registered cooperatives lacking a five-year credit history, the algorithmic rating serves as the sole binding determinant for loan approvals.'
Establishing the governing rule for applicants without a 5-year repayment history.
2
Deduce the logical necessity for an unfavorable rating.
Since the rating is the sole binding determinant, an unfavorable rating necessarily results in loan denial.
A single binding determinant dictates the outcome entirely when alternative qualifying factors (5-year history) are absent.
3
Evaluate distractors against strict passage facts.
Eliminated options claiming complete exemption, grace periods, or relative tool objectivity as unsupported or directly contradicted.
Inference questions require valid deductive necessity based exclusively on given premises.

Key Concept

Strict Deductive Inference from Regulatory Conditions
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Topics

Inference and Logical Deduction

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