Question : Statement 1: Liberalization of the financial sector in India aimed to promote competition among banks.
Statement 2: The Reserve Bank of India (RBI) was abolished as part of financial sector reforms.
Option 1: Both statements are true.
Option 2: Both statements are false.
Option 3: Statement 1 is true, and statement 2 is false.
Option 4: Statement 1 is false, and statement 2 is true.
Correct Answer: Statement 1 is true, and statement 2 is false.
Solution : The correct answer is (c) Statement 1 is true, and statement 2 is false.
Statement 1 is true. The financial sector reforms introduced in the 1991 economic policy aimed to liberalize and modernize the banking sector. One of the objectives was to promote competition among banks, which would lead to efficiency, innovation, and better services for customers.
Statement 2 is false. The Reserve Bank of India (RBI) is the central bank of India and plays a crucial role in the regulation and supervision of the financial sector. It was not abolished as part of the financial sector reforms. In fact, the reforms aimed to strengthen the role of the RBI in ensuring financial stability and implementing monetary policy.
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