BANKING & INSURANCE I NSURANCE LAW LAW SYNOPSIS RE R E COMME COMME NDATI ONS OF THE SE COND COND NARSI NARSI MHAN
“
COMMI COMMI TTE TTE E RE PORT PORT ON ON BANKI NG SE SE CTOR CTOR RE F ORMS ”
SUBMITTED TO: Dr. APARNA SINGH
(ASSISTANT PROFESSOR OF LAW)
PROJECT SUBMITTED BY: ISHI SEHGAL R ISHI
Semester VI, Section B
E NROLL. NO. 150101112 R OLL OLL NO. 115
AM MANOHAR LOHIYA NATIONAL LAW DR . R AM
U NIVERSITY. LUCKNOW, UTTAR PRADESH
ACKNOWLEDGEMENT
I have made this project work, and on the way of completing it, I have learned a lot of things for which I am thankful to Dr. Aparna Singh, Assistant Professor, RMLNLU, Lucknow and my guide, who gave me the opportunity to do this project work and guided me all the way. I would also like to thank my friends, and colleagues, for their opinions, suggestions and critical analysis, which has helped me to improve this project. I also thank the RMLNLU library and the people working there. Their silent work is the reason behind the completion of this project.
I thank God, He has been very generous on me, to have kept me in good health and make the conditions favourable for me to complete this work in time.
INTRODUCTION During the decades of the 60s and the 70s, India nationalised most of its banks. This culminated with the balance of payments crisis of the Indian economy where India had to airlift gold to International Monetary Fund (IMF) to loan money to meet its financial obligations. This event called into question the previous banking policies of India and triggered the era of economic liberalisation in India in 1991. Given that rigidities and weaknesses had made serious inroads into the Indian banking system by the late 1980s, the Government of India (GOI), post-crisis, took several steps to remodel the country's financial system. (Some claim that these reforms were influenced by the IMF and the World Bank as part of their loan conditionality to India in 1991). The banking sector, handling 80% of the flow of money in the economy, needed serious reforms to make it internationally reputable, accelerate the pace of reforms and develop it into a constructive usher of an efficient, vibrant and competitive economy by adequately supporting the country's financia l needs. In the light of these requirements, two expert Committees were set up in 1990s under the chairmanship of M. Narasimham (an ex-RBI (Reserve Bank of India) governor) which are widely credited for spearheading the financial sector reform in India. The first Narasimhan Committee (Committee on the Financial System – CFS) was appointed by Manmohan Singh as India's Finance Minister on 14 August 1991, and the second one (Committee on Banking Sector Reforms) was appointed by P.Chidambaram as Finance Minister in December 1997. Subsequently, the first one widely came to be known as the Narasimham Committee-I (1991)
and the second one as Narasimham-II Committee (1998).This article is about the recommendations of the Second Narasimham Committee, the Committee on Banking Sector Reforms.
The purpose of the Narasimham-I Committee was to study all aspects relating to the structure, organisation, functions and procedures of the financial systems and to r ecommend improvements in their efficiency and productivity. The Committee submitted its report to the Finance Minister in November 1991 which was tabled in Parliament on 17 December 1991. The Narasimham-II Committee was tasked with the progress review of the implementation of the banking reforms since 1992 with the aim of further strengthening the financial institutions of India. It focussed on issues like size of banks and capital adequac y ratio among other things. M. Narasimham, Chairman, submitted the report of the Committe e on Banking Sector Reforms (Committee-II) to the Finance Minister Yashwant Sinha in April 1998.
AIMS & OBJECTIVES 1. To study the various recommendations of the Narsimhan committee 2. To study the subjects touched upon by the committee in the banking sector 3. To study the impact of these reforms in the banking sector
RESEARCH PROBLEM 1. What was the reasons behind the creating the committee? 2. What were the recommendations of the committee? 3. What were the areas of the economy looked upon by the committee? 4. What were the recommendations of the committee? 5. What was the impact of the recommendations on the banking sector?
TENTATIVE CHAPTERISATION
RECOMMENDATIONS OF THE SECOND NARSIMHAM COMMITTEE REPORT ON BANKING SECTOR REFORMS
Capital Adequacy
Assets quality and Directed Credit
Prudential Norms and Disclosure Requirements
Systems and Methods in Banks
Rural and Small Industrial Credit
Conclusion to the report, its recommendations and current status
RESEARCH METHODOLOGY The research shall be based on secondary sources. Literature review will be done extensively in order to make a comprehensive presentation. Books from the university’s library have been used. Articles and reports from different websites have been used in order to get comprehensive data on the subject.
REFERENCES
http://shodhganga.inflibnet.ac.in/bitstream/10603/3712/11/11_chapter%204.pdf
http://www.allbankingsolutions.com/Banking-Tutor/early-bank-reforms1.shtml
http://www.iimahd.ernet.in/~jrvarma/papers/WP1009.pdf
https://www.rbi.org.in/scripts/PublicationReportDetails.aspx?ID=251
