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Private Banks will now be allowed to conduct Government transactions, says Finance Minister

The Central government has decided and lifted up the 2-year-old Embargo on Private banks in our Country to take up and conduct Government Businesses and Transactions.

Business News: The Central government has decided and lifted up the 2-year-old Embargo on Private banks in our Country to take up and conduct Government Businesses and Transactions. This move by Central Government was announced by Finance Minister Nirmala Sitharaman on Wednesday.

Private Banks will now be allowed to conduct Government transactions, says Finance Minister - The Wall Post - PSU Banks
Private Banks will now be allowed to conduct Government transactions, says Finance Minister Image Source – The week

Nirmala Sitharaman tweeted “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 govt’s social-sector initiatives and enhancing customer convenience”. The Ministry said that RBI has been priorly informed of this move.

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Previously, very few Private Sector Bank were allowed to take up government transactions. But, now that the curbs are lifted up all Private banks are free to conduct government transactions such as tax, pensions and other social banking schemes. Private Sectors’ ability to immediately adapt to new techniques and technologies will speed up government projects.

The Finance Minister also said that the Reserve Bank of India will not be subject to clearing authorisation of private banks to conduct govt business transactions. Many industry experts and participants have expressed their support for this move and claim that this will help in smooth running of the economy and will be convenient for the customers.

On the other hand, this move has also drawn criticism that private sector will handle only government transactions that are worth thousands and lakhs of crores, while basic distribution and implementation of government scheme will be let ignorantly. This step widely considered as the government’s efforts to privatize the economy.