Explanation:

Correct Answer is (a).The original sentence is erroneous.
Reason: The word ‘decupling’ means ‘to multiply or be multiplied by ten’ and is unsuitable in this sentence. The correct word to be used here is ‘decoupling’ which means ‘separate or dissociate something from something else.’
Moreover, the sentence speaks about the act of lending and not the lenders themselves. Hence, ‘lending’ should be used in place of ‘lenders’ so as to make the sentence contextually correct.
Among the given choices, only option A replaces the given bold part most appropriately.
The sentence after replacement becomes:
The decoupling of public sector lending and market lending may allow market distortions in both these sectors to be corrected.Option A is hence the correct answer.