Economics · Economy
Which of the following was the most significant structural challenge faced by the Indian banking sector at the beginning of the post-nineties era (around 1991), directly necessitating the Narasimham Committee reforms?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The operational inability of commercial banks to adopt Core Banking Solutions (CBS) frameworks due to technical barriers.
- 2High levels of Non-Performing Assets (NPAs), high statutory pre-emptions (SLR/CRR), and administered interest rates leading to poor profitability.✓
- 3Intense market competition arising from the newly licensed small finance banks and digital payment bank platforms.
- 4The absence of a robust domestic legal framework governing cross-border commercial banking transactions.
Correct answer
High levels of Non-Performing Assets (NPAs), high statutory pre-emptions (SLR/CRR), and administered interest rates leading to poor profitability.
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