Question

Narsimham committee was related to which of following reforms ?
1. High education reforms
2. Tax structure reforms
3. Banking structure reforms
4. Planning implementation reforms

Answer 1

Correct Answer - Option 3 : Banking structure reforms

The correct answer is Banking structure reforms.

 

• Narasimhan Committee is related to Banking structure reforms.
• The Narasimham Committee  was established under former RBI Governor M. Narasimham in August 1991 to look into all aspects of the financial system in India

​ .

• Recommendations of Narasimhan Committee
  • Establishment of 4 tier hierarchy for banking structure with 3 to 4 large banks (including SBI) at the top and at bottom rural banks engaged in agricultural activities.
  • The supervisory functions over banks and financial institutions can be assigned to a quasi-autonomous body sponsored by RBI.
  • A phased reduction in statutory liquidity ratio.
  • Phased achievement of 8% capital adequacy ratio.
  • Abolition of branch licensing policy.
  • Proper classification of assets and full disclosure of accounts of banks and financial institutions.
  • Deregulation of Interest rates.
  •  Delegation of direct lending activity of IDBI to a separate corporate body.
  • Competition among financial institutions on participating approach.
  • Setting up Asset Reconstruction fund to take over a portion of the loan portfolio of banks whose recovery has become difficult.