EMBARGO LIFTED ON GRANT OF GOVERNMENT BUSINESS TO PRIVATE BANKS
Feb. 25, 2021
The Government has lifted the embargo on private sector banks (only a few were permitted earlier) for the conduct of Government-related banking transactions such as taxes and other revenue payment facilities, pension payments, small savings schemes, etc.
About:
With the lifting of the embargo, there is now no bar on RBI for authorization of private sector banks (in addition to public sector banks) for Government business, including Government agency business.
Government-related banking transactions include taxes and other revenue payments, pension payments, and small savings schemes.
In 2012, the finance ministry had not allowed private banks, barring some, to undertake government business for three years.
In 2015, the government had continued with the embargo, and allowed the private sector with existing government agency business to continue without any fresh authorisation to private banks.
For undertaking government agency business, the RBI pays a commission to banks. The central bank carries out the general banking business of the central and state governments through agency banks appointed under Section 45 of the RBI Act, 1934.
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