1 4.Financial Sector Reforms A)Banking Sector Reforms B)Capital Market Reforms C)Insurance Sector Reforms A)Banking Sector Reforms- Narasimham Committee 1. Lowering of SLR Statutory Liquidity Ratio -23% 2. Lowering of CRR Cash Reserve Ratio – 4%
2 3. Deregulation of Interest Rates- Healthy Competition,Operational Efficiency4. Introduction of Prudential Norms –Related to recognition of income, classification of assets5. Introduction of Capital Adequacy Norms –Capital to Risk Weighted Assets -9% from2004- helps banks to absorb a reasonablelevel of losses.6.Entry of New Private Sector Banks –7. Freedom of Operations –New Branches, Extension Counters.
3 8. Special Recovery Tribunals- Quick recovery of loan9. Board for Financial Regulation andSupervision(BFRS) –Regulates and Supervises the activities ofbanks, financial institutions and non –bankfinance companies.B) Capital Market Reforms –SEBI as Statutory Body-SEBI – 1988
4 Statutory Body – 19922. Primary Market Reforms –All information about market.3. Investments by FIIs –Primary and Secondary Markets.4. Establishment of NSE –NSE – 1992, Transparency and Operationalefficiency in Secondary Market.5. Strengthening the Government SecuritiesMarket –Auction System, Setting up of the SecuritiesTrading Corporation of India.
5 C) Insurance Sector Reforms- Monopoly of the Govt.-Insurance Regulatory andDevelopment Authority Act(IRDA)-1999