Q. Which of the following recommendation/s is/are given by Narsimham Committee – I with respect to interest rates?
1.Interest rates to be broadly determined by market forces.
2.Bank rate to be the anchor rate and all other interest rates to be closely linked to it.
3.The RBI to be the sole authority to simplify the structure of interest rates.
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: D
Notes:

Explanation: The major recommendations on the structure of interest rates are:

  1. Interest rates to be broadly determined by market forces;
  2. All controls of interest rates on deposits and lending to be withdrawn;
  3. Concessional rates of interest for PSL of small sizes to be phased out and subsidies on the IRDP loans to be withdrawn;
  4. Bank rate to be the anchor rate and all other interest rates to be closely linked to it; and
  5. The RBI to be the sole authority to simplify the structure of interest rates.

Source: Ramesh Singh

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