Module: | Priority Sector, Consumer Protection & Digital Lending
Q152: The current prudential norms on Income Recognition, Asset Classification, and Provisioning (IRAC) in the Indian banking system are primarily based on the recommendations of which committee?
✅ Correct Answer: B
The correct answer is B. The prudential norms relating to Income Recognition, Asset Classification, and Provisioning (IRAC) were formally introduced in the Indian banking system starting in 1992-93.
This transformative shift away from the earlier subjective "Health Code System" to objective, mathematically driven prudential norms was executed strictly based on the landmark recommendations of the Committee on the Financial System (CFS), which was chaired by Shri M. Narasimham (often referred to as Narasimham Committee I). While Basel guidelines influence capital adequacy, the direct origin of the IRAC framework in India is credited to the Narasimham Committee.
This transformative shift away from the earlier subjective "Health Code System" to objective, mathematically driven prudential norms was executed strictly based on the landmark recommendations of the Committee on the Financial System (CFS), which was chaired by Shri M. Narasimham (often referred to as Narasimham Committee I). While Basel guidelines influence capital adequacy, the direct origin of the IRAC framework in India is credited to the Narasimham Committee.