- The Narasimham Committee (Committee on Financial System) was formed in 1991.
- It reviewed the Indian financial sector and suggested reforms.
- Key Recommendations:
- SLR should be based on prudential requirements, not government finance.
- Interest rates should be gradually deregulated.
- RBI should use open market operations more than CRR.
- Interest rates on SLR investments should be market-related.
- Directed credit programs should be phased out or redefined.
- Create a level playing field for public, private, and foreign banks.
- Establish an Asset Reconstruction Company (ARC) for bad debts.
- Select few large banks for international character.
- End duality of control over banking system; RBI should be primary regulator.