Private banks can now participate in government businesses, as FM Sitharaman lifted the embargo on the grant on Wednesday. Taking to Twitter, Sitharaman said private banks can now be equal partners in the development of the Indian economy, furthering Govt's social sector initiatives, and enhancing customer convenience.
Embargo lifted on grant of Govt business to private banks. All banks can now participate. Private banks can now be equal partners in development of the Indian economy, furthering Govt's social sector initiatives, and enhancing customer convenience. @FinMinIndia @DFS_India
— NSitharamanOffice (@nsitharamanoffc) February 24, 2021
Following the announcement, the market gained momentum in its extended trading session. Nifty50 surged 1.69 percent, Sensex was 1.84 percent up, while Nifty Bank was trading 3.37 percent high.
Private bank shares rise further as embargo on grant of govt business lifts.#update #CNBCTV18Market pic.twitter.com/OHPhjpI16o
— CNBC-TV18 (@CNBCTV18Live) February 24, 2021
The government has lifted the embargo on private sector banks for the conduct of government-related banking transactions such as taxes and other revenue payment facilities, the Department of Financial Services said in a press release on Wednesday.
“This step is expected to further enhance customer convenience, spur competition, and higher efficiency in the standards of customer services,” it said.
With the lifting of the embargo, there is no bar on RBI for the authorisation of private sector banks (in addition to public sector banks) for government business, including agency business.
Private sector banks are at the forefront of imbibing and implementing the latest technology in the banking sector, now the government will be able to leverage their innovations to further its social sector initiatives.
First Published: Feb 24, 2021 4:17 PM IST
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