Question

Discuss the following Banking Sector Reforms:

(a) Narasimham Committee, 1991

(b) Narasimham Committee II-1998

03 Aug 2025
Answer :
Word Count : 850
(a) Narasimham Committee, 1991 The Narasimham Committee of 1991 was constituted to examine all aspects related to the structure, organisation, functioning, and procedures of the financial system in India, with particular reference to the banking sector. It was set up under the chairmanship of M. Narasimham, former Governor of the Reserve Bank of India. The committee was a response to the financial sector inefficiencies and the need to align India’s banking system with global practices in the wake of the 1991 economic crisis and the onset of liberalisation. The committee’s key recommendations included the reduction of statutory preemptions such as the Statutory Liquidity Ratio (SLR) and the Cash Reserve Ratio (CRR) to ensure that banks had more resources for productive lending. It recommended reducing SLR from 38.5% to 25% and CRR from 15% to 3%. This was aimed at improving the efficiency of resource allocation and encouraging banks to focus more on commercial lending rather than merely parking funds in government securities. Another major recommendation was the strengthening of the __________ _________ _____ ________ ________ _______ _______ _______.
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