BANKING AFFAIRS

Detailed explanation-1: -The Narasimham Committee had recommended the creation of Regional Rural Banks. Regional Rural Bank (RRB) is also known as a small man’s bank. It was recommended for the development of the rural economy in India.

Detailed explanation-2: -The Narsimham committee conceptualised the creation of RRBs in 1975 as a new set of regionally oriented rural banks, which would combine the local feel and familiarity of rural problems characteristic of cooperatives with the professionalism and large resource base of commercial banks.

Detailed explanation-3: -Accordingly, they suggested reducing SLR rates from 38.5% to 25% and CRR from 15% to 3-5%. The Government of India implemented credit programmes that compelled banks to set aside funds for the needy and poor sectors at decreased rates.

Detailed explanation-4: -The Narasimham committee has recommended that the provisions of the RBI Act, Banking Regulation Act, State Bank of Act, and other laws be reviewed and amended as soon as possible in order to bring them in line with current banking needs.

Detailed explanation-5: -For that, Ministry of Finance under then finance minister Dr Manmohan Singh set up Narasimham Committee to analyse India’s banking sector and recommend reforms. The Committee was set up under the chairmanship of Maidavolu Narasimham.