In the context of reform policy introduced in and after 1991, the investment limit in foreign banks was raised to around _____ as part of financial sector reform.
Show answer & explanation
Correct answer: D
Explanation
As part of the liberalization process initiated after the 1991 LPG Reforms, the foreign investment limit in private sector banks was raised to 74%.
Financial Sector Reforms and Foreign Investment (FDI)
Capital Inflow: This step was taken to bring foreign capital and modern technology into Indian banks.
Competition: Allowing foreign investment increased healthy competition among domestic banks, which improved the quality of banking services.
Management: The increased stake of foreign investors helped banks adopt global standards in management and better corporate governance.