Reforms Development In The Banking Sectors
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One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What was the primary objective of the Narasimham Committee I (1991) recommendations?
The Narasimham Committee I aimed to transform the Indian banking sector by reducing statutory pre-emptions, introducing prudential norms, and moving towards a more market-oriented financial system.
What is the minimum Capital to Risk-weighted Assets Ratio (CRAR) prescribed by RBI for Indian banks?
9% under Basel III norms for Indian banks.
Which year marks the beginning of the liberalisation era in Indian banking reforms?
1991 marks the beginning of banking sector reforms in India, triggered by the balance of payments crisis and the acceptance of Narasimham Committee I recommendations.
What is the Statutory Liquidity Ratio (SLR) and which Act mandates it?
Banks must invest in approved securities; mandated by Banking Regulation Act 1949.
What is the significance of the Capital Adequacy Ratio (CAR) introduced during banking reforms?
CAR, based on the Basel framework, requires banks to maintain a minimum percentage of risk-weighted assets as capital to ensure solvency and financial stability. India adopted Basel norms from 1992 onwards.
Which committee in 1991 recommended reduction of CRR and SLR to free bank funds?
Narasimham Committee I recommended reducing pre-emption ratios.
What did the Narasimham Committee II (1998) primarily focus on?
Narasimham Committee II focused on strengthening the financial system, reducing NPAs, merging weak banks with stronger ones, and further improving bank governance and prudential norms.
What is the concept of Interest Rate Deregulation introduced during banking reforms?
Banks are free to set their own lending and deposit interest rates.
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