Finance Minister Nirmala Sitharaman gave this information in her social media post about 3 months ago.
The Reserve Bank of India (RBI) on Monday issued revised guidelines for starting government business by private banks. This includes both state and central work. If put in easy words, private banks can earn more by starting a government business. Let us tell you that in February 2021, the Finance Ministry lifted the ban imposed in September 2012 on the allocation of government business to private sector banks.
Finance Minister Nirmala Sitharaman had said in her social media post about 3 months from today that private banks will also be able to join the banking operations of the government.
Till now the banking work of the government was done only through the public sector banks. With the removal of restrictions on private banks, the convenience of customers will increase, competition will increase and the standards of customer service will rise.
Know about the new rules
According to the new guidelines issued by RBI, scheduled private banks can do government business after agreement with RBI. Banks running under the Prompt Corrective Action (PCA) of RBI will not have this exemption.
The RBI said in a statement that banks not involved in agency banking agreement with RBI and banks intending to handle the business of government agency can enter into this agreement with it.
He said, “No private bank applying at the time of agreement should be included in PCA. Only then it will be able to understand.
Now what can private banks be able to do
According to the Finance Ministry, now private banks will also be able to become equal partners in the development of the Indian economy, the social sector work of the government and the convenience of customers. There was no restriction on giving government banking work to private banks on RBI.
What will be the effect on customers now
Private banks can also be involved in government-related banking transactions such as tax and other revenue payment facilities. This step will increase the convenience of customers, increase competition and raise the standard of customer service.
After the removal of this ban, there is no restriction on RBI to give government banking work to private banks. The industry welcomed the removal of the ban on private banks.
Uday Kotak, MD, Kotak Mahindra Bank said that I welcome this progressive reform. This will enable the banking sector to provide better service to the customers. Both the private and government sectors should work together for the sustainable development of the country.
