February 24, 2021: Finance Minister Nirmala Sitharaman announced on Wednesday, February 24, that the Centre has lifted embargo on grant of government businesses to private banks. Taking to Twitter, FM Sitharaman further stated that all banks can now be "equal partners in development of the Indian economy."
"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," the finance minister tweeted.
With the lifting of the said embargo, private sector banks can now carry out government-related banking transactions such as taxes and other revenue payment facilities, the Department of Financial Services stated 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.
The market gained momentum following the announcement, with the Nifty50 surging by 1.69 per cent and Sensex up by 1.80 per cent. Nifty Bank Index was trading 3.37 per cent higher.
Although the finance ministry is yet to come out with the modalities regarding the roping in of private banks for government businesses, the Reserve Bank of India had in 2012 indicated that such lenders need to be designated as agents of the central bank.
Wednesday's announcement by the Centre comes days after FM Sitharaman, in her budget speech, noted that more public sector lenders would be privatized in the upcoming fiscal.
According to a Reuters report on February 15, the government has filtered out four state-run banks - Central Bank of India, Bank of India, Bank of Maharashtra, and Indian Overseas Bank for privatization.
STORY HIGHLIGHTS
February 24, 2021: Finance Minister Nirmala Sitharaman announced on Wednesday, February 24, that the Centre has lifted embargo on grant of government businesses to private banks.
February 24, 2021: Finance Minister Nirmala Sitharaman announced on Wednesday, February 24, that the Centre has lifted embargo on grant of government businesses to private banks. Taking to Twitter, FM Sitharaman further stated that all banks can now be "equal partners in development of the Indian economy."
"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," the finance minister tweeted.
With the lifting of the said embargo, private sector banks can now carry out government-related banking transactions such as taxes and other revenue payment facilities, the Department of Financial Services stated 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.
The market gained momentum following the announcement, with the Nifty50 surging by 1.69 per cent and Sensex up by 1.80 per cent. Nifty Bank Index was trading 3.37 per cent higher.
Although the finance ministry is yet to come out with the modalities regarding the roping in of private banks for government businesses, the Reserve Bank of India had in 2012 indicated that such lenders need to be designated as agents of the central bank.
Wednesday's announcement by the Centre comes days after FM Sitharaman, in her budget speech, noted that more public sector lenders would be privatized in the upcoming fiscal.
According to a Reuters report on February 15, the government has filtered out four state-run banks - Central Bank of India, Bank of India, Bank of Maharashtra, and Indian Overseas Bank for privatization.