1 and 2 are correct.
Gandhi-Irwin Pact placed the Congress on an equal footing with the government. Irwin on behalf of the government agreed on—
1. immediate release of all political prisoners not convicted of violence;
2. remission of all fines not yet collected;
3. return of all lands not yet sold to third parties;
4. lenient treatment to those government servants who had resigned;
5. right to make salt in coastal villages for personal consumption (not for sale);
6. right to peaceful and non-aggressive picketing; and
7. withdrawal of emergency ordinances.
The viceroy, however, turned down two of Gandhi’s demands—
(i) public inquiry into police excesses, and
(ii) commutation of Bhagat Singh and his comrades’ death sentence to life sentence.

All of the above are correct
August Offer (August 1940) proposed:
● dominion status as the objective for India;
● expansion of viceroy’s executive council which would have a majority of Indians (who would be drawn from major political parties);
● setting up of a constituent assembly after the war where mainly Indians would decide the constitution according to their social, economic and political conceptions, subject to fulfilment of the obligation of the government regarding defence, minority rights, treaties with States, all India services; and
● no future constitution to be adopted without the consent of minorities.

Both the statements are correct.
The main proposals of the Wavell Plan were as follows.
• With the exception of the governor-general and the commander-in-chief, all members of the executive council were to be Indians.
• Caste Hindus and Muslims were to have equal representation.
• The reconstructed council was to function as an interim government within the framework of the 1935 Act (i.e. not responsible to the Central Assembly).
• Governor- General was to exercise his veto on the advice of ministers.
• Representatives of different parties were, to submit a joint list to the viceroy for nominations to the executive.

Statement 1 is correct while statement 2 is incorrect.
A bad bank is an asset reconstruction company (ARC) or an asset management company that takes over the bad loans of commercial banks, manages them and finally recovers the money over a period of time.
The bad bank is not involved in lending and taking deposits, but helps commercial banks clean up their balance sheets and resolve bad loans.

Both the statements are correct.
Off-budget borrowings are loans that are taken not by the Centre directly, but by another public institution which borrows on the directions of the central government. Such borrowings are used to fulfil the government’s expenditure needs. But since the liability of the loan is not formally on the Centre, the loan is not included in the national fiscal deficit. This helps keep the country’s fiscal deficit within acceptable limits.