The Report of the Committee on Banking Sector Reforms, (April 1998) (Chairman: M. Narasimham) recommended restructuring of the existing BFS. The Committee recommended that an integrated system of regulation and supervision be put in place to regulate and supervise the activities of the banks, financial institutions and NBFCs.
It also recommended that the RBI Act Section 58 should be amended to enable the RBI Central Board to frame regulations to set up a separate and distinct Board for Financial Regulation and Supervision (BFRS). The Board’s exclusive task would be to regulate and supervise banks, financial institutions and NBFCs so as to ensure the soundness of the financial system.