Problems before banking sector - Budget & Economic Survey
Q. Banking is hobbled by policy, which creates double financial repression, and by structural factors, which impede competition. The solution lies in
1) Deregulation
2) Differentiation
3) Diversification
4) Decentralization
5) Disinterring- Published on 06 Aug 15a. 1, 2, 3, 5
b. 1, 3, 5
c. 1, 3, 4
d. 1, 3, 4, 5
ANSWER: 1, 2, 3, 5
The solution lies in the 4 Ds of deregulation (addressing the statutory liquidity ratio (SLR) and priority sector lending (PSL)), differentiation (within the public sector banks in relation to recapitalization, shrinking balance sheets, and ownership), diversification (of source of funding within and outside banking), and disinterring (by improving exit mechanisms).
