The document discusses significant reforms in India's financial sector initiated in 1991 aimed at stabilizing the economy during a crisis. Key changes included the establishment of regulatory bodies, opening capital markets to foreign investors, and restructuring the banking system through recommendations from the Narsimham Committees. These reforms sought to create an efficient and competitive financial environment, including modernizing trading systems and enhancing the autonomy of banks.

1. Presented by-
Abhishek Sharma
Neha Goyal
Pragati Bhargava
Sanjeev Yadav

2.  Reformation or changes in policies, laws, structure,
functioning and framework of financial departments
of country.
 Aimed to create an efficient, competitive and stable
financial sector that could contribute to growth of
country.
 Changes according to requirements of economic
situation of country.

3.  In 1991, India was facing major economic crisis,
BOP crisis.
 Forex reserves were extremely low, not even able to
pay 1 week import bill.
 Economic growth was less than 2%.
 Almost all the banks were incurring losses.
 Indian economy was at collapse condition.
 Significant reforms were made by Mr. Manmohan
Singh in 1991.

4. Capital market reforms
 Establishment Of SEBI in 1992.
 As Apex regulator of Indian Capital market.
 To protect the interest of investors in securities market.
 To frame entry norms, code of conduct and functioning.
 Opening the capital market to foreign investors.
 An important policy initiative in 1993.
 Opening the capital market to Foreign Institutional
Investors(FII).
 Include mutual funds, pension funds, and other foreign
investments.

5.  Modernization of trading and settlement system.
 On-line trading was introduced in all stock exchanges.
 Settlement period was reduced to one week.
 Dematerialization account was introduced.
 Setting up new stock exchanges.
 Initially BSE was main exchange.
 NSE was set up in 1994 as automated electronic exchange.
 Spread the business and work of stock exchange across the
country.

6. Earlier banking Structure reforms:
 In 1955, Imperial bank of India was nationalised to
State Bank of India(SBI).
 In 1956, 7 regional banks were nationalised as
associate bank of SBI.
 In 1969, 14 big commercial banks were nationalised
having deposits worth Rs. 50 crore or more.
 In 1980, 6 other scheduled banks were nationalised.
 Significant reforms were done in 1991.

7. INTRODUCTION
 The 1st Narsimham committee was set up by Mr.
Manmohan Singh on 14th August 1991.
 A nine member committee was set up under the
chairmanship of Mr. M. Narsimham, former Governor
of RBI.
 The committee submitted its report in November 1991,
passed by parliament on 17th Dec. 1991.
 Recommendations on:
◦ Structure of banks
◦ Organisation of banks
◦ Functions of banks
◦ Procedures.
Mr. M. Narsimham

8. RECOMMENDATIONS:
 Structural reorganisation of banks- substantial reduction.
 Freedom to foreign banks to open offices- as branches or
subsidiaries.
 Special tribunal for recovery of loans- granted by banks.
 Statutory Liquidity Ratio(SLR) & Cash Reserve Ratio(CRR).
-SLR should be reduced from present 38.5% to 25% over next 5
years.
-CRR should be reduced from present 15% to 3-5%.
 Removal of duality of control over bank- only RBI should
control, not banking division of ministry of finance.
 Adoption of uniform accounting practices- full disclosure of
assets and liabilities as per international accounting
standards.

9. Narsimham committee Report II
(1998)
 The 2nd Narsimham committee was made by Mr. p.
Chidambaram in 1997.
 Committee submitted report to finance minister Mr. Yashwant
Sinha in April 1998.
 It was known as committee on Banking sector reforms.
 Mainly focused on:
 Capital Adequacy Ratio(CAR).
 Size of banks.
 Review progress and implementation of reforms.
Mr. P. Chidambaram
Mr. Yashwant Sinha

10. RECOMMENDATIONS:
 Greater Autonomy in banking in both Ownership and
management.
 Reformation 0f role of RBI.
- Segregate regulatory and supervisory role of RBI.
- Withdraw its day treasury bill from market.
 Stronger banking system by merger of strong banks.
 Capital Adequacy Ratio and tightening of provisioning norms.
-Raising the CAR to 9% by 2000 and 10% by 2002.
 Non Performing Assets.
- Need for “zero” NPA for all Indian banks.
-Creation of Asset Reconstruction Funds to take over the bad debts.
 Need for more computerisation process in banks.

11. THANK
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