All Private Banks Allowed To Offer Government-related Tax and Revenue Payment Facilities

The Indian government on Wednesday lifted an embargo that prohibited private sector banks from carrying out government-related banking business. All private banks are now allowed to carry out government-related banking transactions like taxes and other revenue payment facilities, pension payments and small savings schemes.

n a tweet, office of Nirmala Sitharaman, the finance minister says, "Embargo lifted on grant of government business to private banks. All banks can now participate. Private banks can now be equal partners in development of the Indian economy, furthering government's social sector initiatives, and enhancing customer convenience.

A statement issued by the department of financial services (DFS) under the finance ministry says, "This step is expected to further enhance customer convenience, spur competition and higher efficiency in the standards of customer services. 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 and in furthering the social sector initiatives of the government."

With the lifting of the embargo, there is now no bar on Reserve Bank of India (RBI) for authorisation 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 release from DFS says.

 

Uday Kotak, chief executive of Kotak Mahindra Bank welcomed the move to allow all private sector banks handle government business. In a tweet, he says, “It will enable the banking sector to serve customers better.”