Q. Which of the following is/are recommendation/s of M. Narsimham Committee – II?
1.Merger of the PSBs and the financial institutions (AIFIs) were suggested.
2.A 3-tier banking structure was suggested after merger.
3.Higher norms of Capital-to-Risk—Weighted Adequacy Ratio (CRAR) suggested.
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Explanation: The Narasimham Committee-II (popularly called by the Government of India) handed over its reports in April 1998, which included the following major suggestions:
- Need for a stronger banking system for which mergers of the PSBs and the financial institutions (AIFIs) were suggested—stronger banks and the DFIs (development financial institutions, i.e., AIFIs) to be merged while weaker and unviable ones to be closed.
- A 3-tier banking structure was suggested after mergers.
- Higher norms of Capital-to-Risk—Weighted Adequacy Ratio (CRAR) suggested—increased to 10 per cent.
Source: Ramesh Singh