BANKING AFFAIRS

Detailed explanation-1: -So, simply, Narrow Banking involves mobilizing the large part of the deposits in Risk Free assets such as Government Securities. Now, please note the following: Banks in India partially implement the Narrow banking.

Detailed explanation-2: -A narrow bank is a financial institution that issues demandable liabilities and invests in assets that have little or no nominal interest rate and credit risk.

Detailed explanation-3: -A “Narrow Bank” is a type of banking where a bank invests its money in risk-free assets with maturities that match its liability maturity profile. This prevents asset-liability mismatch issues from occurring and ensures that the quality of the assets is maintained without the emergence of subpar assets.

Detailed explanation-4: -Narasimham Committee-II (1998) In order to intimate the second generation of financial sector reforms a committee on Banking Sector Reforms was formed in 1998 again under the chairmanship of M. Narasimham.