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Centre lifts embargo on private banks to engage in government-related business

Before this, only a few private banks were permitted to engage in government businesses such as taxes and other revenue payment facilities, pension payments, small savings schemes, etc.

By: Express Web Desk | New Delhi |
Updated: February 24, 2021 7:37:41 pm
Nirmala Sitharaman, Rahul Gandhi, Doomsday Man, Nirmala targets Rahul, fake narratives, insulting india, Indian express newsIn its report for February, the Department of Economic Affairs said economic activities have gathered pace, with mild stiffening of the Covid curve failing to deter a steady uptick in consumer sentiment that has been bolstered by the inoculation drive. (File photo)

Ramping up its efforts to boost privatisation, the Centre Wednesday lifted the embargo on private sector banks for the conduct of government-related banking transactions. Before this, only a few private banks were permitted to engage in government businesses such as taxes and other revenue payment facilities, pension payments, small savings schemes, etc.

“Private banks can now be equal partners in the development of the Indian economy, furthering the government’s social sector initiatives and enhancing customer convenience,” Finance Minister Nirmala Sitharaman tweeted.

This step is expected to further enhance customer convenience, spur competition, and higher efficiency in the standards of customer services, the government said.

The step could be seen as an extension of Prime Minister Narendra Modi’s pitch for privatisation during his speech in the Lok Sabha during the Budget Session of the Parliament. Modi’s statements pitching the importance of the private sector come in the backdrop of a push towards government spending, which the government expects will help crowd in private investment.

A statement released by the Centre said private sector banks are at the “forefront of imbibing and implementing latest technology and innovation in banking”. With this move, private sector banks would now be equal partners in the development of the Indian economy and in furthering the social sector initiatives of the government, the statement read.

With the lifting of the embargo, there is now no bar on RBI for authorization of private sector banks (in addition to public sector banks) for government business, including government agency business. The government has conveyed its decision to RBI, the statement read.

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