The Narasimham Committee-II was appointed by the Indian government in 1997 to further examine and make recommendations on the financial sector reforms in India. The committee was chaired by M. Narasimham and submitted its report in April 1998. Some of the key recommendations of the Narasimham Committee-II are:
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Consolidation of the banking sector: The committee recommended the consolidation of the banking sector through mergers and acquisitions to create stronger and more efficient banks.
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Reduction of government stake in public sector banks: The committee recommended reducing the government stake in public sector banks to below 33% to improve their management and governance.
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Establishment of a banking sector regulator: The committee recommended the establishment of an independent banking sector regulator to oversee the functioning of banks and ensure compliance with regulations.
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Strengthening of the financial system: The committee recommended strengthening the financial system through measures such as improving risk management, promoting competition, and enhancing the role of credit rating agencies.
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Promotion of electronic banking: The committee recommended the promotion of electronic banking to increase efficiency, reduce costs, and improve customer convenience.
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Introduction of new financial products: The committee recommended the introduction of new financial products such as asset-backed securities and credit derivatives to deepen the financial markets and enhance risk management.
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Development of the insurance sector: The committee recommended the development of the insurance sector by allowing foreign direct investment, promoting competition, and improving the regulatory framework.
Overall, the Narasimham Committee-II recommendations aimed to further improve the efficiency, competitiveness, and stability of the Indian financial sector. Many of these recommendations have been implemented over the years, leading to significant improvements in the functioning of the financial sector.
