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.
Highlights:
- 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.
