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HomeNews ReportsNow private sector banks can conduct government transactions, union government lifts embargo

Now private sector banks can conduct government transactions, union government lifts embargo

With the lifting of the embargo, private sector banks will be able to conduct government-related banking transactions such as taxes and other revenue payment facilities, pension payments, small savings schemes etc

Just days after Prime Minister Narendra Modi hailed the private sector, the union government has decided to lift a ban that was there on private sector banks from government transactions. In a major reform in the financial sector, the embargo on the grant of government business to private banks was lifted by the finance ministry.

Announcing the decision, finance minister Nirmala Sitharaman said that with this, now all banks can participate in government business. She added that all banks can now be equal partners in development of the Indian economy. “Private banks can now be equal partners in development of the Indian economy, furthering Govt’s social sector initiatives, and enhancing customer convenience,” she said.

A press release issued by the Department of Financial Services under the union finance minister said that with the lifting of the embargo, private sector banks will be able to conduct government-related banking transactions such as taxes and other revenue payment facilities, pension payments, small savings schemes etc. At present, only a few government transactions are allowed through only a few selected private banks, with government banks mandated for most other services.

This step is expected to further enhance customer convenience, spur competition and higher efficiency in the standards of customer services. The department added that the private sector banks, which are at the forefront of imbibing and implementing latest technology and innovation in banking, will now be equal partners in development of the Indian economy.

With the lifting of the embargo, now there is no bar on Reserve Bank of India for authorisation of private sector banks for government businesses, including government agency business. The statement by the ministry added that the RBI has been conveyed about the decision.

It is notable that while the opposition Congress party, especially Rahul Gandhi, has launched a massive attack on the private sector in the country, PM Narendra Modi had slammed such an attack and had defended the private industry in the Parliament. After years of Adani-Ambani rants of Rahul Gandhi, the PM had said that abusing the private sector for votes is no longer acceptable. ‘If the public sector is important, the role of the private sector is also vital’, PM Modi had said during his reply in Lok Sabha to the discussion on the motion of thanks to the President’s address.

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Staff reporter at OpIndia

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