Assertion: Financial sector reforms in India aimed to reduce the role of the Reserve Bank of India (RBI) in regulating the financial institutions.
Reasoning: The role of RBI as a regulator was seen as a hindrance to the efficient functioning of the financial sector.
Answer & explanation
Correct answer: option 1
Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.
Financial sector reforms in India indeed aimed to reduce the role of the Reserve Bank of India (RBI) in regulating the financial institutions. The objective was to shift from a regulatory role to a facilitator role, allowing greater autonomy and decision-making by the financial sector. The role of RBI as a regulator was seen as a hindrance to the efficient functioning of the financial sector. By reducing its regulatory control, the reforms aimed to enhance the efficiency, competitiveness, and innovation within the financial sector.