MCQ Test: Important Committees - 2 - Bank Exams MCQ

• The National Income Committee was appointed by the Government of India in August 1949.
• P.C. Mahalanobis was the chairman and D.R. Gadgil and Dr. V.K.R.V. Rao are the members of the committee.
• The first report of the National Income Committee was signed on 15 April 1951.
• According to the first report, the total national income of the country for 1948-49 was Rs.8710 crore and the per capita income was Rs.225. 

The following are the explanation for the correct match:

Key Points

• SEBI had set up a high-level panel to suggest possible structures and regulations for creating 'social stock exchanges'.
• To facilitate listing and fund-raising by social enterprises as well as voluntary organisations.
• The committee will be headed by Ishaat Hussain (Director at SBI Foundation and former Finance Director at Tata Sons).
• He outlined its vision and made recommendations to include the participation of non-profit organisations (NPOs) and for-profit enterprises (FPEs) on social stock exchanges subject to committing to minimum reporting requirements.

Additional Information

• Securities and Exchange Board of India (SEBI) is a statutory body and a market regulator, which controls the securities market in India.
• The basic functions of SEBI are to protect the interests of investors in securities and to promote and regulate the securities market. 
• SEBI is run by its board of members.
  • ​The board consists of a Chairman and several other whole time and part-time members.
  • The chairman is nominated by the union government.
• Before SEBI came into existence, the Controller of Capital Issues was the regulatory authority; it derived authority from the Capital Issues (Control) Act, 1947.
• In 1988, SEBI was constituted as the regulator of capital markets in India.
• Initially, SEBI was a non-statutory body without any statutory power.
• Following the passage of the SEBI Act by Parliament in 1992, it was given autonomous and statutory powers.

Important point  

• Chairman: Ajay Tyagi
• Headquarter: Mumbai

• Arun Jaitley is not a member of the Monetary Policy Committee.
• Dr. Chetan Ghate, Dr. Chetan Ghate, Dr. Pami Dua, Dr. Viral V. Acharya and Dr. Urjit R. Patel are all members of Monetary Policy Committee.
• Monetary Policy Committee (MPC) is constituted under section 45ZB of the amended Reserve Bank of India Act, 1934.
• The Governor of RBI is the Chairman of MPC.

The six-member committee on the development of housing finance securitisation market, headed by Bain & Co Senior Advisor Harsh Vardhan, has been asked to assess the role of various counterparties, including the servicers, trustees, rating agencies, in the securitisation process and suggest measures required.

• The correct sequence is Karve Committee(1955), Nayak Committee(1991), Abid Hussain Committee(1997), S. S. Kohli Committee(2000).

Important Points

• The Karve Committee
  • The Karve Committee is also known as the village and small-scale industries committee  was set up in 1955.
  • It was set up to find out the potential of utilizing small scale industry for promoting rural development.
• Nayak Committee
  • The Reserve Bank of India constituted on 9 December 1991, a Committee under the Chairmanship of Shri P.R. Nayank, Deputy Governor to examine the difficulties confronting the small-scale industries (SSI) in the country in the matter of securing finance.
• Abid Hussain Committee
  • The Abid Hussain Committee on SSIs (1997) examined the problems of the SSI sector.
  • The Abid Hussain Committee Report on Trade Policy Reform and the Abid Hussain Committee Report on Small Scale Industries have been regarded as milestones in India's economic reforms.
• S. S. Kohli Committee
  • The RBI in November 2000 had appointed the working group under the chairmanship of SS Kohli the chairman of the Indian Bank Association to review the existing guidelines in regard to rehabilitation of sick units in the small-scale industrial sector and to recommend the revision of the guidelines making them transparent and non-discretionary.

Chelliah Committee was formed in 1992 to make recommendations on the tax regime of Indian govt.

The correct answer is option 1, i.e. Pannir Selvam Committee.

• Pannir Selvam Committee Report submitted in 1998 on NPAs of public sector banks suggests Arbitration/Conciliation under the Arbitration Act 1996 as an effective tool.
• Some of the observations made in that report in this connection are extracted below.
• The Pannir Selvam Committee has pointed out that the main reason for the growth of NPAs and slump in recoveries in banks in India is the antiquated legal system and the laws prevalent in the country. 
• Thus according to the committee unless the legal system in the country is thoroughly overhauled/ reformed it would be increasingly difficult to tackle the NPA problem.
• In contrast, banks abroad have been able to contain their NPAs because of quick disposal of litigation by their judicial systems to release their dues.
• The committee suggests various measures to strengthen credit monitoring by setting up special recovery cells placing persons with credit management skills in branches having sizeable NPAs, and intensive follow up of substandard assets for the up-gradation.
• It further suggests periodic meetings with borrowers, the constitution of special recovery teams, exploring possibilities to quickly get the account adjusted by compromise/write off. Provisions have been made for doubtful and loss assets, obtaining additional security to strengthen loan assets and reduce the provision requirements.
• The committee strongly recommends making the Arbitration act 1996 to be made applicable to banks. Compulsory Arbitration by senior Retd Judges or Ex- ED/CMD of Banks / FIs is advocated before a reference to high court /DRT.

Malegam committee

• The Board of Directors of RBI constituted a Sub-Committee to study the issues and concerns on the microfinance sector.
• This SubCommittee of the Board was formed on October 15, 2010, under the chairmanship of Mr Y.H. Malegam

Mandal committee

• The Mandal Commission was established in India on 1 January 1979 by the Janata Party government under Prime Minister Morarji Desai
• Its mandate was to "identify the socially or educationally backward classes" of India.
• It was headed by the late B.P. Mandal

Key Points

• Nariman Committee
  • The Nariman Committee in 1969 recommended a scheme to unite the commercials banks co-operative banks and government and semi-government agencies to work together for the socio-economic growth of the country.
  • The Lead Bank Scheme was also introduced.
  • The Lead Bank Scheme was introduced to provide lead roles to individual banks (both in the public sector and private sector) for the districts allotted to them.

Additional Information 

• Bhagwati Committee
  • In November 1995, SEBI appointed a committee to review the Takeover Regulations of 1994 under the chairmanship of Justice P.N. Bhagwati (the Bhagwati Committee).
  • The committee submitted its report in January 1997.
• Narasimhan Committee
  • 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.
  • The first Committee was set up in 1991 and is referred to as the Narasimham Committee- I and the 1998 Committee is known as the Narasimham Committee – II.

The amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda (BoB) came into effect from 1 April 2019.

• With amalgamation with BOB to create India's third largest bank.
• According to the Amalgamation Scheme, Vijaya Bank shareholders would earn 402 BoB equity shares for every 1,000 shares owned.
• In Dena Bank's case its shareholders will receive 110 BoB shares per 1,000 shares.
• The three-way merger announcement was among many reform initiatives undertaken by Financial Services Secretary Rajiv Kumar to make public-sector banks (PSBs) stable, robust and competitive globally.

The Narsimhan Committee-I was appointed by the then Finance Minister of India, Dr. Manmohan Singh in order to ensure that the public trust could be maintained in the banking system. It recommended the following in this regard:

• Reduction of CRR and SLR to 3-5% and 15% respectively
• Phasing out of the Directed Credit Program to extend credit to the poor and needy sectors of the economy
• Determination of interest rate by supply and demand of the market
• Reorganization of the banking sector into large, medium and small banks
• Abolition of dual control of banks by the Reserve Bank of India and the Ministry of Finance
• Establishment of the Asset Reconstruction Fund to take care of the NPAs in banks

• The Narasimhan Committee-II submitted its report in 1998 and it mainly recommended the merger of banks and Development Finance Institutions along with the NBFCs in the country based on operational efficiency and business interests.
• It is the first document that advocated for the merger of banks or consolidation in the banking sector of the country.

• RBI formed a sub-committee to study the issues and concerns in the microfinance sector under the chairmanship of YH Malegam.
• In the wake of the AP microfinance crisis in 2010, RBI constituted a committee under the chairmanship of Shri Y H Malegam to study issues and concerns in the MFI sector.
• The regulatory approach toward microfinance has been largely based on the recommendations of the Malegam Committee.
• The key recommendations of the Malegam Committee were as follows:
  • Creation of a separate category of NBFC operating in the microfinance sector to be designated as NBFC-MFI.
  • Criteria for defining ‘microfinance loans’ classified as ‘qualifying assets.
  • Prudential norms on capital adequacy and provisioning requirements
  • Prescriptions related to the pricing of credit in terms of a margin cap and interest rate ceiling on individual loans.
  • Transparency in interest charges as well as other terms and conditions of the loan Measures to address multiple lending, over-borrowing and coercive methods of recovery Establishment of a proper system of grievance redressal

The Narasimham Committee, constituted in 1991, played a crucial role in addressing the issue of NPAs in Indian banks. The committee, headed by M. Narasimham, submitted two reports known as the Narasimham Committee Reports. These reports provided recommendations to enhance the efficiency and stability of the Indian banking system, including measures to tackle NPAs.

The P. J. Nayak Committee, constituted in 2014, recommended the establishment of the National Payments Corporation of India (NPCI). The committee, headed by P. J. Nayak, submitted a report titled "Governance of Boards of Banks in India," which focused on improving the governance structure of public sector banks. As part of its recommendations, the committee proposed the creation of the NPCI to oversee and regulate various payment systems in the country.