Economics · Financial Sector Reforms
The Narasimham Committee I (1991) recommended foundational reforms for the Indian financial sector. Which of the following recommendations, focused on reducing government intervention in banking operations, was considered a crucial step toward enhancing the efficiency of Public Sector Banks (PSBs)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Granting freedom to PSBs to fix their lending and deposit rates by deregulating interest rate controls.✓
- 2Elimination of the requirement for banks to adhere to the mandated Priority Sector Lending (PSL) targets.
- 3Phased reduction of the Cash Reserve Ratio (CRR) to a level below 5 percent to ensure adequate liquidity.
- 4Mandatory reduction of the Statutory Liquidity Ratio (SLR) from over 38.5 percent to a statutory minimum of 25 percent.
Correct answer
Granting freedom to PSBs to fix their lending and deposit rates by deregulating interest rate controls.
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