Which of the following statement (s) is/are correct in the context of financial sector reforms implemented in 1991?

Statement 1: Foreign investment limit in banks was raised to 51 per cent as part of financial sector reforms implemented in 1991.

Statement 2: Banks were given permission to generate resources from India and abroad except that certain managerial aspects were retained with the RBI to safeguard the interests of the account-holders and the nation.

Only Statement 2 is correct.

The reform policies led to the establishment of private sector banks, Indian as well as foreign. Foreign investment limit in banks was raised to around 74 per cent. Those banks which fulfil certain conditions have been given freedom to set up new branches without the approval of the RBI and rationalise their existing branch networks. Though banks have been given permission to generate resources from India and abroad, certain managerial aspects have been retained with the RBI to safeguard the interests of the account-holders and the nation. Foreign Institutional Investors (FII), such as merchant bankers, mutual funds and pension funds, are now allowed to invest in Indian financial markets.