IBPS SO Prelims Exam Model Paper 1

In an essential ause, use that. In non-essential clauses, use which. If you can remove the clause without destroying the meaning of the sentence, the clause is nonessential and you can use which.
For example:
Our office, which has two lunchrooms, is located in Delhi.
Our office that has two lunchrooms is located in Delhi.
These sentences are not the same. The first sentence tells us that you have just one office, and it’s located in Delhi. The clause which has two lunchrooms gives us additional information, but it doesn’t change the meaning of the sentence. Remove the clause and the location of our one office would still be clear: Our office is located in Delhi.
The second sentence suggests that we have multiple offices, but the office with two lunchrooms is located in Delhi. The phrase that has two lunchrooms is known as a restrictive or essential clause because another part of the sentence (our office) depends on it. You can’t remove that clause without changing the meaning of the sentence.
Thus, option 2 is the correct answer.
Correct sentence:
Some of the industry’s biggest names have come forward with proposals for Fortis Hospitals, which is facing a severe cash crunch.