What was the recommendation of the Narasimham Committee-Il regarding public sector banks?
Show answer & explanation
Correct answer: C
Explanation
Answer: Merge and consolidate public sector banks
Explanation: The Narasimham Committee II (1998) on banking sector reforms recommended the merger and consolidation of public sector banks (PSBs) to create stronger and more efficient banks. The idea was to improve competitiveness, reduce fragmentation, and strengthen the financial stability of the banking system.
The committee did not recommend full privatization or increasing government ownership, but instead focused on structural reforms, efficiency, and reducing non-performing assets.
Additional Key Facts:
Chaired by M. Narasimham, former RBI Governor.
Recommended reducing government equity in banks to improve autonomy.
Suggested creation of stronger global-sized banks through mergers.
Emphasized improving asset quality and capital adequacy.
Also recommended stricter prudential norms for banking operations.
Potential Exam-Oriented Questions & Answers:
Question: What was the main focus of Narasimham Committee II?
Answer: Banking sector reforms and consolidation.
Question: What is the benefit of merging banks as per the committee?
Answer: To create stronger and more efficient banks.