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.
General Knowledge
Indian Economy
Difficulty: Medium
Choose an option
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AEntry of new private sector banks with minimum capital and prudential norms
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BCreation of a universal basic income scheme for rural households
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CFixing administered prices for agricultural commodities
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DConversion of all development financial institutions into commercial banks overnight
Answer
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 / ApproachKey recommendations included prudential norms (income recognition, asset classification, provisioning and capital adequacy), deregulation, and allowing new private sector banks under RBI guidelines (1993).
ReasoningRBI issued guidelines enabling the entry of new private sector banks with stipulated minimum capital and compliance with prudential standards, aligning with the Committee.
Final AnswerRBI framed guidelines for the entry of new private sector banks with prudential norms.