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Banking sector reforms (Narasimham Committee): Identify what new RBI guidelines were framed in pursuance of the Committee’s recommendations. Focus on entry/prudential norms for commercial banking. Choose the correct area.

Difficulty: Medium

Correct Answer: Entry of new private sector banks with minimum capital and prudential norms

Explanation:


Given data

  • Narasimham Committee (1991) proposed financial sector reforms.


Concept / Approach
Key recommendations included prudential norms (income recognition, asset classification, provisioning and capital adequacy), deregulation, and allowing new private sector banks under RBI guidelines (1993).


Reasoning
RBI issued guidelines enabling the entry of new private sector banks with stipulated minimum capital and compliance with prudential standards, aligning with the Committee.


Final Answer
RBI framed guidelines for the entry of new private sector banks with prudential norms.

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