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This fiscal year, the recently released budget proposes privatising two public sector banks. Which of the following committees recommended that PSU banks be privatised?
1. Narasimham Committee
2. Naresh Chandra Committee
3. P J Nayak Committee
Select the correct answer code:
- a)1, 2
- b)2, 3
- c)1 only
- d)1, 3
Correct answer is option 'D'. Can you explain this answer?
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This fiscal year, the recently released budget proposes privatising tw...
Many committees had proposed bringing down the government stake in public banks below 51% — the Narasimham Committee proposed 33% and the P J Nayak Committee suggested below 50%. An RBI Working Group recently suggested the entry of business houses into the banking sector.
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This fiscal year, the recently released budget proposes privatising tw...
Introduction:
The recently released budget proposes the privatisation of two public sector banks in the fiscal year. This decision was recommended by two committees, namely the Narasimham Committee and the P J Nayak Committee. In this response, we will discuss the recommendations of these committees and their role in suggesting the privatisation of PSU banks.
Narasimham Committee:
The Narasimham Committee, headed by M. Narasimham, was established in 1991 to examine and recommend measures for the reform of the Indian banking sector. The committee submitted two reports, one in 1991 (Narasimham Committee I) and another in 1998 (Narasimham Committee II).
1. Narasimham Committee I:
- Recommended the reduction of government interference in public sector banks (PSBs).
- Suggested the need for greater autonomy for PSBs to improve their efficiency and profitability.
- Proposed the recapitalisation of PSBs to strengthen their capital base.
- Emphasized the need for the Reserve Bank of India (RBI) to have greater regulatory powers over PSBs.
2. Narasimham Committee II:
- Focused on the consolidation and strengthening of PSBs.
- Recommended the privatisation of PSBs to improve their governance and efficiency.
- Stressed the importance of reducing the government's stake in PSBs and allowing private participation.
P J Nayak Committee:
The P J Nayak Committee, chaired by P J Nayak, was formed in 2014 to review the governance of boards of PSBs. The committee submitted its report in 2014, which had significant recommendations regarding the privatisation of PSBs.
1. P J Nayak Committee Recommendations:
- Advocated the dilution of government stake in PSBs to less than 50%.
- Suggested the establishment of a Bank Investment Company (BIC) to hold the government's shareholding in PSBs.
- Recommended the appointment of professional boards and CEOs for PSBs to improve their governance and decision-making processes.
Conclusion:
In conclusion, the correct answer to the given question is option 'D' (1, 3). The Narasimham Committee and the P J Nayak Committee have both recommended the privatisation of public sector banks in their respective reports. These recommendations aim to enhance the efficiency, profitability, and governance of PSBs by reducing government interference and introducing private participation. The proposed privatisation of two PSBs in the current fiscal year aligns with the suggestions put forth by these committees.
The recently released budget proposes the privatisation of two public sector banks in the fiscal year. This decision was recommended by two committees, namely the Narasimham Committee and the P J Nayak Committee. In this response, we will discuss the recommendations of these committees and their role in suggesting the privatisation of PSU banks.
Narasimham Committee:
The Narasimham Committee, headed by M. Narasimham, was established in 1991 to examine and recommend measures for the reform of the Indian banking sector. The committee submitted two reports, one in 1991 (Narasimham Committee I) and another in 1998 (Narasimham Committee II).
1. Narasimham Committee I:
- Recommended the reduction of government interference in public sector banks (PSBs).
- Suggested the need for greater autonomy for PSBs to improve their efficiency and profitability.
- Proposed the recapitalisation of PSBs to strengthen their capital base.
- Emphasized the need for the Reserve Bank of India (RBI) to have greater regulatory powers over PSBs.
2. Narasimham Committee II:
- Focused on the consolidation and strengthening of PSBs.
- Recommended the privatisation of PSBs to improve their governance and efficiency.
- Stressed the importance of reducing the government's stake in PSBs and allowing private participation.
P J Nayak Committee:
The P J Nayak Committee, chaired by P J Nayak, was formed in 2014 to review the governance of boards of PSBs. The committee submitted its report in 2014, which had significant recommendations regarding the privatisation of PSBs.
1. P J Nayak Committee Recommendations:
- Advocated the dilution of government stake in PSBs to less than 50%.
- Suggested the establishment of a Bank Investment Company (BIC) to hold the government's shareholding in PSBs.
- Recommended the appointment of professional boards and CEOs for PSBs to improve their governance and decision-making processes.
Conclusion:
In conclusion, the correct answer to the given question is option 'D' (1, 3). The Narasimham Committee and the P J Nayak Committee have both recommended the privatisation of public sector banks in their respective reports. These recommendations aim to enhance the efficiency, profitability, and governance of PSBs by reducing government interference and introducing private participation. The proposed privatisation of two PSBs in the current fiscal year aligns with the suggestions put forth by these committees.
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This fiscal year, the recently released budget proposes privatising two public sector banks. Which of the following committees recommended that PSU banks be privatised?1. Narasimham Committee2. Naresh Chandra Committee3. P J Nayak CommitteeSelect the correct answer code:a)1, 2b)2, 3c)1 onlyd)1, 3Correct answer is option 'D'. Can you explain this answer?
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