General Knowledge · Banking Committees
The Narasimham Committee II (1998) proposed structural changes to make the Indian banking system globally competitive. Which of the following recommendations was emphasized by the committee regarding the structural tiering of public sector banks?
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- 1The implementation of a three-tier banking structure consisting of 3 to 4 large banks with international presence, 8 to 10 national banks, and local banks.✓
- 2The complete abolition of the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) to provide absolute credit expansion capabilities.
- 3The conversion of existing Development Financial Institutions into specialized NBFCs providing bridge loans to micro-enterprises.
- 4The mandatory merger of all Regional Rural Banks with their respective Sponsor Banks to subsume the rural credit system.
Correct answer
The implementation of a three-tier banking structure consisting of 3 to 4 large banks with international presence, 8 to 10 national banks, and local banks.
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