Fin Min lifts embargo on grant of government business to private banks, BFSI News, ET BFSI

The Ministry of Finance on Wednesday said the embargo on allotment of government business to private banks has been lifted.

FM Nirmala Sitharaman‘s office in a tweet said, “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.”

The move got a swift response from the stock market with BSE Sensex rising over 1000 points and the NSE Nifty settled near the 15,000 mark.

DFS in a media brief said this move will enable private sector banks (only a few were permitted earlier) to conduct of centre-related banking transactions such as taxes and other revenue payment facilities, pension payments and small savings schemes.

It added, this step is expected to further enhance customer convenience, spur competition and higher efficiency in the standards of customer services.

“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. The government has conveyed its decision to RBI,” the brief further said.