Question

“In the formative stages of reforms development of credit markets, administrative intervention in interest rates is both necessary and desirable.” Identify the sector under which the aforesaid reform was introduced.

• A. Tax reforms
• B. Industrial sector reforms
• C. Financial sector reforms
• D. Foreign sector reforms

Hint:

Interest rates + credit markets → Financial sector

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Financial sector reforms in India, initiated in 1991, aimed to transform the role of the RBI from a regulator to a facilitator and to liberalize the banking and credit markets.
Step 2: Detailed Explanation:
The development of credit markets and the management of interest rates are core components of the financial system.
Initially, interest rates were strictly regulated by the RBI (administrative intervention).
During the reform process, these controls were gradually lifted to allow market forces to determine rates, making the banking system more efficient and competitive.
Since this pertains to banks, credit, and interest, it falls under Financial Sector Reforms.
Step 3: Final Answer:
The reform mentioned is a part of the Financial sector reforms.