♤ Reduction in CRR and SLR.

♤ Interest Rate Deregulation: The Committee observed that the prevailing structure of administered rates was highly complex and rigid and called for deregulating it so that it reflects the emerging market conditions. However, it warned against instant deregulation and suggested gradual deregulation over a period of time.

♤ Structural Reorganization of Banks: the Committee believed that the structure should consist of 3-4 Banks (including SBI) becoming International Banks, 8 to 10 national banks with a nationwide network of branches engaged in universal banking, Local banks operations would be generally confined to a specific region, Rural banks (including RRBs) to the rural areas predominantly engaged in financing of agriculture and allied activities.

♤ Establishment of ARF tribunal: The committee recommended the establishment of an Asset Reconstruction Fund (ARF) which would take over the proportion of the bad and doubtful debts from the banks and financial institutes. All bad and doubtful debts of the banks were to be transferred in a phased manner to ensure smooth and effective functioning of the ARF. The committee also suggested the formation of special tribunals to recover loans granted by the bank

♤ Allowing Banks to raise Capital: The Committee recommended that profitable banks and banks with good reputation should be permitted to raise capital from the public through the capital market. Regarding other banks, the government should subscribe to their capital or give a loan, which should be treated as a subordinate debt, to meet their capital requirements.