The embargo on private banks has been lifted by the Centre on Wednesday, 24 February allowing the banking institutions to conduct transactions on behalf of the government.
This move is to allow both private and public sector banks to be on an equal footing towards developing India’s economy, announced Finance Minister Nirmala Sitharaman.
In a tweet, the Finance Minister said on Wednesday that opening up private banks will further the Centre’s “social sector initiatives, and enhancing customer convenience”.
The Centre is lifting the embargo on the belief that the private banking sector has always been in the forefront of implementing latest technology and innovation, and the government’s latest move will push competition and higher efficiency in banking services, especially with regards to customer service and convenience.
Private sector banks will now be able to carry out government related transactions, such as taxes and other revenue payment facilities, pension payments, small savings scheme, and other such financial transactions. Only a few private banks were able to carry out these banking activities for the Centre before.
The Centre has conveyed the lifting of the embargo to the Reserve Bank of India, adding that there is no longer any need for authorisation of private sector banks for government and agency business by RBI.
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