Question

N.K.BAGRODIA PUBLIC SCHOOL, ROHINI
UNSEEN COMPREHENSION (WORKSHEET)
CLASS -9 and 10
Read the following passage carefully and answer the
questions given below it.
Banking sector reforms in India were introduced in order to
improve efficiency in the process of financial intermediation. It was
expected that banks would take advantage of the changing
operational environment and improve their performance. Towards
this end, the Reserve Bank of India initiated a host of measures for
the creation of a competitive environment. Deregulation of interest
rates on both deposit and lending sides imparted freedom to banks
to appropriate price their products and services.
To compete effectively with non-banking entities, banks were
permitted to undertake newer activities like investment banking,
securities trading and insurance business. This was facilitated
through amendments in the relevant acts which permitted PSBs to
raise equity from the market up to threshold limit and also enabling
the entry of new private and foreign banks. This changing face of
banking led to an erosion of margins on traditional banking business,
promoting banks to search for newer activities to augment their free
incomes. At the same time, banks also needed to devote focused
attention to operational efficiency in order to contain their transaction
costs
Simultaneously with the deregulation measures prudential norms
were instituted to strengthen the safety and soundness of the banking
system. Recent internal empirical research found that over the period
1992-2003, there has been a discernible improvement in the
efficiency of Indian banks. The increasing trend in efficiency has been
fairly uniform, irrespective of the ownership pattern. The rate of such
improvement has, however, not been sufficiently high. The analysis
also reveals that PSBs and private sector banks in India did not
different significantly in terms of their efficiency measures. Foreign
banks, on the other hand, recorded higher efficiency as compared
with their Indian counterparts.
1. Prudential norms were initiated in the banking sector with a
view to-
a) Increase operational efficiency

Answer 1

Answer:

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Explanation:

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