BANKING AFFAIRS

Detailed explanation-1: -The Narasimham-II Committee was tasked with the progress review of the implementation of the banking reforms since 1992 with the aim of further strengthening the financial institutions of India. It focussed on issues like size of banks and capital adequacy ratio among other things.

Detailed explanation-2: -The first phase of current reform of financial sector was initiated in 1992, based on the recommendations of Committee on Financial System (CFS or Narasimham Committee).

Detailed explanation-3: -Manmohan Singh established the Narasimham committee to examine the functioning of banks. On 14th August 1991, Government of India appointed a nine-member team called the Narasimham Committee I.

Detailed explanation-4: -The Committee was set up under the chairmanship of Maidavolu Narasimham. He was the 13th governor of the Reserve Bank of India (RBI) from 2 May 1977 to 30 November 1977. There was another Committee, this time under P Chidambaram as the finance minister, headed by Narasimham, which was formed in 1998.

Detailed explanation-5: -The Committee wanted the banks to reduce their NPAs to 3% by 2002. It also recommended the formation of Asset Reconstruction Funds or Asset Reconstruction Companies. The recommendations led to the introduction of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.