RBI Grade B Officer (General / DEPR / DSIM) 2025 · Question 244 of 259

- Read the passage given below and answer the following questions: The Government of India initiated a comprehensive reform process in the financial system during 1992–93, following the recommendations of the Committee on the Financial System (1991). As part of the second phase of reforms, another committee was constituted in December 1997 under the chairmanship of M. Narasimham. The committee focused on strengthening the banking system through improved regulation, competition, and efficiency. Its terms of reference clearly indicated an emphasis on banking sector reforms, including prudential norms and market-oriented monetary tools. The committee recommended greater participation of private and foreign banks to enhance competition. It also emphasised shifting from direct controls to indirect instruments of monetary policy for liquidity management. Several structural and operational reforms of the banking system were guided by these recommendations. (This is a recreated passage and not the exact one asked in the exam) Which of the following statements is/are correct with reference to the above paragraph? 1. The committee referred to in the paragraph is the Committee on Banking Sector Reforms. 2. The committee recommended licensing of new private banks, including domestic and foreign banks. 3. The committee recommended continued reliance on CRR as the primary tool for liquidity management.

Monetary Policy

1. AA. Only 1
2. BB. Only 1 and 2Correct
3. CC. Only 2 and 3
4. DD. Only 1 and 3
5. EE. 1, 2 and 3