Which policy reform targeted improving competitiveness and efficiency of the banking system after 1991?

Correct option is A

The correct answer is (a) Introduction of prudential norms and CRAR.
• After the 1991 economic reforms, India adopted prudential norms to enhance the soundness and transparency of the banking system.
• Capital to Risk-Weighted Assets Ratio (CRAR) was introduced to maintain financial stability and reduce credit risk.
Information Booster:
• CRAR ensures banks have sufficient capital to absorb potential losses.
• Introduced under Narasimham Committee Report (1991).
• RBI adopted Basel Norms for global banking standardization.
• Reforms improved efficiency, profitability, and transparency in Indian banks.
• Strengthened the framework for Non-Performing Assets (NPAs) management.
Additional Knowledge:
• Narasimham Committee II (1998) recommended recapitalization and mergers.
• Basel norms set global capital adequacy standards.
• Post-reform measures led to modernization and technological upgrades in banking.
• These reforms helped India withstand the 2008 Global Financial Crisis effectively.