Tag: government business

RBI empanells Dhanlaxmi Bank as Agency Bank

Banking & Finance

[ad_1]

Read More/Less


Thrissur-based Dhanlaxmi Bank has been empanelled as ‘Agency Bank’ by the Reserve Bank of India to undertake general banking businesses of Central and State governments on behalf of the RBI.

Dhanlaxmi Bank entered into agreement with the RBI at the Department of Government and Bank Accounts (DGBA), Reserve Bank of India, Mumbai.

It is now authorized to undertake transactions related to government businesses such as revenue receipts and payments on behalf of the Central and State governments, pension payments in respect of Central and State governments, works related to small savings schemes (SSS), collection of stamp duty through physical mode or e-mode, and any other item of work specifically devised by the RBI as eligible for agency commission.

Also see: Dhanlaxmi Bank shareholders reject appointment of auditors

Dhanlaxmi Bank has 245 branches spread across 15 States and Union Territories. The Bank has an excellent technology team in creating customised solutions for customers, thereby providing flexibility and ease of banking while leveraging in-depth understanding of customer needs.

Shivan J K, Managing Director and CEO, Dhanlaxmi Bank, said, “We are proud to be one among the private sector banks empanelled by the RBI to facilitate transactions related to government businesses.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Karnataka Bank empanelled as ‘Agency Bank’ for government business

Banking & Finance

[ad_1]

Read More/Less


Karnataka Bank is empanelled by the Reserve Bank of India (RBI) to act as an ‘Agency Bank’ to facilitate transactions related to the government businesses.

A media statement by the bank said on Friday that as an empanelled ‘Agency Bank’, Karnataka Bank is now authorised to undertake the government businesses such as revenue receipts and payments on behalf of the Central/State governments, pension payments in respect of Central/State governments, collection of stamp duty charges and also any other item of work specifically advised by RBI.

Quoting Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank, it said: “We are privileged to be appointed by the regulator to facilitate transactions pertaining to all kinds of Government-led businesses. With pan-India presence, driven by strong and robust technology and digital platforms, we are confident of being the best choice for the Central and State governments in providing the best possible financial solutions in the most seamless manner. Further, with this arrangement, a level-playing field is being ensured and it will augur well in developing a ‘cost-lite’ liability portfolio for the bank.”

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

How government business will help private banks, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The central government has allowed permission to new private banks for conducting government-related business will be given under the RBI guidelines. The government has indicated the RBI to allow other private banks to perform government-related business to ensure there is a level playing field.

The potential

With deposits of at over Rs 11 lakh crore, the government sector, both Central and states combined, business is very lucrative for the private sector banks. It is a source of bulk deposits, which gives them ‘float’ money that can be deployed in the overnight market. It helps get low-cost and stable deposits and customer acquisition with scores of government employees opening accounts.

It generates commission income, which though is falling, forms a substantial chunk.

How can private banks benefit

Private banks are more aggressive in marketing and technology savvy than PSBs. However, they do not have a branch network that rivals PSBs which are spread to the village levels. Private banks will find it tough to give competition to PSBs in the hinterland.

Also, private banks, with their sparse branch networks, will find the small value pension business unviable, which the PSBs with their vast manpower strength can serve. Also, shifting the pension account business would be cumbersome for many

What should the private banks do?

Experts say private banks should focus on garnering new government business, which will help them acquire new customers.

With the growing number of taxpayers and development programmes such as Jan Dhan, the government business remains lucrative for the private banks. However, it may be still some time they catch up with the PSB peers.

What the Finance Minister says

“Now, following the existing norms based on which several banks have been given permission to do the business. So, those rules as per the RBI guidelines be applied on newer banks and new private banks which approach the RBI,” finance minister Nirmala Sitharama said while giving permission to new private banks.

“Some customers are already benefiting from private banks from such services. The attempt now is to bring a level playing eld. Some private banks are already doing, all public sector banks are doing, why not extend to all private sector banks so that everybody gets an equal opportunity,” she explained.

This is being done because the business is growing and many more citizens are approaching the banks. As it was highlighted, the ease of doing business will have to be extended to all customers, she said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , ,

Govt biz: private banks not to have it all easy

Banking & Finance

[ad_1]

Read More/Less


Private sector banks better watch out as the recent government move to lift embargo on grant of government business to them comes with strings attached.

They now run the risk of permission — for undertaking government business — being withdrawn if they are found to lag the performance of public sector banks (PSBs) in implementing social sector government initiatives through banks, the Finance Ministry has cautioned.

Put simply, the government, in consultation with the RBI, would from time to time review the performance of private sector banks on a matrix of various government initiatives and schemes.

“In case it is found that there is adverse performance by any private sector bank in the future, then the permission to the concerned bank to undertake government business could be potentially withdrawn after giving due opportunity to the bank to correct the imbalance,” said a source in Department of Financial Services (DFS).

This stance of DFS should be music to the ears of PSBs, which have time and again been complaining that private sector banks are keen only on profitable initiatives and were not willing to do heavy lifting when it came to government social schemes that are to be implemented through banks.

Ease of doing business

The Finance Ministry on Wednesday decided to lift an embargo on allocation of government business (including government agency business) to private sector banks. The objective of this move is to boost the ease of doing business and ease of living for the public, including retail customers, small and medium enterprises as also larger corporates with regard to their government-related banking transactions such as taxes and other revenue payment facilities and many other transactions.

This decision has been taken to ensure a level playing field to all public sector and private sector banks, enhancement of customer convenience, enabling innovation and latest technology in the banking sector, and spurring of competition for higher efficiency and increase in standards of customer service, ultimately leading to all-round value creation.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

Customers stand to gain as private banks can now take up govt business

Banking & Finance

[ad_1]

Read More/Less


Surabhi

The lifting of the embargo on granting government business to private banks will not only enable them get a greater share of government business, but will also benefit their customers, say experts.

“Customers of new private sector banks will be very happy, there will be a marginal change for old private banks and public sector banks may lose some ground,” said a former banker.

At present, apart from public sector banks, only a few large private sector banks are allowed to do government business.

Now, all private banks will be able to take up activities such as small savings schemes such as public provident fund and Sukanya Samriddhi accounts, and tax payments and pension payments, among other initiatives.

Customers with existing accounts in a private bank will not have to approach a public sector bank for these activities.

“It will be a gain to the customer as well as to the bank. Apart from the three large private sector banks, other private banks can also now serve customers for services such as tax payments, pensions and small saving scheme,” said Prashant Kumar, Managing Director and CEO, YES Bank, adding that private banks can also offer solutions to the government for payment of subsidies and direct benefit transfers through their strong focus on technology.

Tech advantage

Most private bankers believe that in terms of technology, they are much better positioned to serve customers.

Uday Kotak, Managing Director and CEO, Kotak Mahindra Bank, in a tweet said: “It will enable the banking sector to serve customers better. Private and public sector must both work towards sustainable development of India.”

Private banks are also hopeful of higher fee income and float from doing government business.

“Fee income will be a direct advantage to private banks as they will get commission for doing government business. Public sector banks will lose ground on this,” noted a former banker.

Meanwhile, float or the amount parked with banks by customers, is being seen as another big positive by private banks. Government business brings in float money to public sector banks, some of which will now be routed to private banks.

“The float and fee income that can be garnered on tax collections (₹11 trillion budgeted for 2021-22), duties, GST collections (₹11 trillion), payment facilities, Central/state pension plans (₹2 trilion), small savings schemes (₹13 trillion) can add significant delta to revenues,” said a note by ICICI Securities.

Unions unhappy

However, bank unions point out that public sector banks have been at the forefront of opening Jan Dhan accounts, financial inclusion through branch opening in rural areas, as well as giving out Mudra loans while private banks have lagged behind.

“The government is trying to bring a level-playing filed with a different set of guidelines for private banks. They should create the same rules for them and bring them under the ambit of CVC and other regulatory guidelines,” said Soumya Datta, General Secretary, All India Bank Officers’ Confederation.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

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

Banking & Finance

[ad_1]

Read More/Less


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.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,