Finance Ministry allows all Private Banks in Government Business

Private Banks in Government Business:

The Finance Ministry allows all the Private Banks in Government Business. Currently, only some of the big private sectors are allowed to conduct government-related businesses. This article covers the important details about the Private Banks in Government Business and the Private banks in the implementation of government schemes and government businesses.

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  • So, now the embargo has been lifted and this move will enhance the customer convenience and simulate the competition.
  • It will also stimulate higher efficiency in standards of customer services.
  • Private banks remain at the forefront of imbibing and implementing the latest technology and innovation in banking.
  • Now they have become equal partners in the development of the Indian economy.
  • Now, the bar has also been lifted on RBI to authorize the private sector banks along with the public sector banks for Government business and Government agency business.

Important Things:

  • At present only state-owned banks and large private sector banks are eligible to conduct government businesses.
  • This includes collecting revenues and disbursing payments under various government schemes.
  • While other private sector banks are allowed to open collection accounts for government departments, they were not allowed to do any cash management business, which formed a large chunk of the government business.
  • Reacting to the announcement, Kotak Mahindra Bank’s chief executive officer Uday Kotak tweeted “it will enable the banking sector to serve customers better.
  • Private and public sector must both work towards sustainable development of India.”
  • “Earlier other private sector banks had to go through PSU banks or large private sector banks for even servicing our customers for tax collections.
  • Government departments used to discriminate against the smaller private banks on the basis of having an extensive branch network requirement.
  • Now that is not relevant as many aspects of government are becoming tech-centric where smaller banks can play to their strengths,” said a senior banker with a small private sector bank.

These are the highlights and important things to know about Private banks in government businesses.

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