Financial Awareness - Risk, Stability & Emerging Finance
Which of the following committees recommended the phased reduction of Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) to improve liquidity in the banking system?
Which of the following committees recommended the phased reduction of Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) to improve liquidity in the banking system?
hard Q9 of 15
Step-by-Step Solution
Step 1: Understand the role of SLR and CRR
SLR and CRR are tools to control liquidity; reducing them increases liquidity in the banking system.Step 2: Identify the committee recommending their phased reduction
Narasimham Committee I recommended gradual reduction of SLR and CRR to improve liquidity and efficiency.Step 3: Exclude other committees
Narasimham II focused on prudential norms; Rangarajan on monetary policy; Verma on fraud governance.Final Answer:
Narasimham Committee I → Option CQuick Check:
Phased reduction of SLR and CRR = Narasimham Committee I ✅
Quick Trick: Narasimham I = phased reduction of SLR and CRR.
Common Mistakes:
- Confusing liquidity reforms with prudential norms of Narasimham II.
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