Government lifts restriction on private banks to engage in government-related business
Earlier, only a few private banks were allowed to engage in the government businesses such as pension payments, taxes and other revenue payment facilities, small saving schemes, etc.
The Central Government on February 24, 2021, decided to remove the ban on the private sector banks to conduct government-related banking transactions.
Earlier, only a few private banks were allowed to engage in the government businesses such as pension payments, taxes and other revenue payment facilities, small saving schemes, etc. According to the Finance Ministry, the step will further spur competition, enhance customer convenience, higher efficiency in the standards of customer services.
The Union Finance Minister Nirmala Sitharaman while sharing the news on her official Twitter account mentioned that private sector banks can now be equal partners in strengthening the government’s social sector initiatives, in the development of the country’s economy, and enhancing customer convenience.
निजी बैंक अब सरकारी बैंकों के साथ बनेंगे देश के विकास में बराबर के साथी। निजी बैंकों के ऊपर सरकारी व्यवसाय पर लगी रोक हटी। उपभोक्ताओं को मिलेगी बेहतर सेवाएँ व सुविधाएं। सरकार के सामाजिक और वित्तीय समावेश योजनाओं में निजी बैंक भी होंगे भागीदार। @FinMinIndia https://t.co/ITtxalwNbx— NSitharamanOffice (@nsitharamanoffc) February 24, 2021
No authorization by RBI:
With the restriction on private banks being lifted, there is now no bar on the Reserve Bank of India for the authorization of the private sector banks, in addition to public sector banks, for the government business which includes the government agency business. The decision has already been conveyed to RBI.
Effort to boost privatization:
As per the statement released by the government, private sector banks are at the forefront of implementing and imbibing the latest technology and innovation in banking.
The step can also be seen as an extension of PM Modi’s speech in Lok Sabha during the Budget Session where he pitched for privatization. The statements by the Prime Minister had come in a backdrop of a push towards government spending, which they expect will help crowd in the private investment.