Q. Which of the following recommendation/s is/are given by Narsimham Committee – I?
1.CRR should be progressively reduced.
2.SLR should be brought down to minimum level.
3.Directed credit programme should be continued.
Choose the correct answer from below given codes:

[A] 1 only

[B] 1 and 2 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: B

Explanation: The RBI was advised not to use the CRR as a principal instrument of monetary and credit control, in place it should rely on open market operations (OMOs) increasingly.

  • CRR should be progressively reduced from the present high level of 15 per cent to 3 to 5 per cent;
  • Concerning the SLR it was advised to cut it to the minimum level (i.e., 25 per cent) from the present high level of 38.5 per cent in the next 5 years (it was cut down to 25 per cent in October 1997).
  • Directed credit programme should be phased out gradually. As per the committee, agriculture and small-scale industries (SSIs) had already grown to a mature stage and they did not require any special support.

Source: Ramesh Singh