This is a dated piece going back to 1998. Narrow banks or safe banks are those whose assets are required to be invested only in safe and liquid government bonds. This was proposed as an option for weak banks in India by the Committee on Capital Account Convertibility, chaired by S.S. Tarapore, former Deputy Governor of the Reserve Bank of India, in the year 1997. My comment on this recommendation was published in the Op-Ed page of Economic Times dated 24 April 1998. In view of the general nature of discussion having relevance for policy makers across the world, its continuing relevance, and the fact that it is not available in soft copy form even on the website of the Economic Times, it is reproduced here. Continue reading “Narrow Banking: Is it an option for weak banks?”
