Banking Sector Reforms — Prelims Strategy
Prelims Strategy
To ace Prelims questions on Banking Sector Reforms, a multi-pronged approach focusing on factual recall, chronological understanding, and conceptual clarity is essential. Firstly, create a detailed timeline of major reforms, including dates of nationalization, Narasimham Committee reports (1991 & 1998), Basel norm adoption (I, II, III), SARFAESI Act, IBC, and the licensing of Payment and Small Finance Banks.
Memorize key percentages and thresholds: current PSL targets (40% for commercial banks, 75% for SFBs), CRAR requirements (Basel III total capital 11.5% including CCB), and NPA classification (90 days overdue).
Understand the specific functions and limitations of different banking entities (e.g., Payment Banks cannot lend). Pay close attention to the objectives of each reform phase: nationalization for social banking, Narasimham for liberalization, Basel for prudential regulation, IBC for NPA resolution.
Practice MCQs that test definitions, chronology, and the 'what' and 'when' of reforms. Use mnemonics like 'BANK-SMART' to quickly recall key aspects. Focus on recent RBI circulars and government notifications related to banking, as current affairs often form the basis of Prelims questions.