Discussion
Read the following events
(i) Allowing convertibility of rupee at the market rate in the current account.
(ii) Nationalisation of general insurance business.
(iii) Establishment of IDBI
(iv) Capital adequacy norms for commercial banks.
Arrange the events in the ascending order of their occurrence.
Answer: A
Correct answer: iii, ii, iv, i
Place each event on the timeline and read them off in ascending order:
(iii) The Industrial Development Bank of India was established in 1964, originally as a wholly owned subsidiary of the RBI.
(ii) General insurance business was nationalised in 1972, under the General Insurance Business (Nationalisation) Act, which brought 107 insurers together into GIC and its four subsidiaries.
(iv) Capital adequacy norms were introduced for commercial banks in 1992, when the RBI adopted the Basel I framework on the Narasimham Committee’s recommendation.
(i) The rupee became convertible at the market rate on the current account in 1993–94, after the dual exchange rate of LERMS was unified in March 1993 and full current account convertibility was accepted in August 1994.
The order is therefore iii, ii, iv, i. Note that none of the four options as recorded carried this sequence - the keyed option read “iv, iii, ii, i” - so the keyed option’s text has been corrected to the true chronology.
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