Which of the following was a key feature of financial sector reforms under NEP 1991?
Establishment of private sector banks
Financial sector reforms under the New Economic Policy of 1991 followed the Narasimham Committee (1991) recommendations. One key feature was allowing new private sector banks: RBI issued guidelines in 1993, and banks such as UTI Bank (now Axis), ICICI Bank and HDFC Bank were licensed.
The reforms reduced the RBI's role from regulator to facilitator, lowered SLR and CRR, freed interest rates and permitted foreign investment in banks, rather than increasing RBI control or restricting FDI.
Nationalisation of banks took place earlier, in 1969 and 1980, and was not part of the 1991 reforms.
Hence, a key feature was the establishment of private sector banks.
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Select the correct answer using the code given below.
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