Centre lifts embargo on grant of government business to private banks, says Nirmala Sitharaman – Business News , Firstpost

Private banks can now be equal companions within the growth of the Indian financial system, the Union finance minister added

Union finance minister Nirmala Sitharaman. Image courtesy CNBC-TV18

New Delhi: The finance ministry on Wednesday allowed all private sector banks to take part in government-related business like the gathering of taxes pension funds and small financial savings schemes.

At the second, just a few giant private sectors are allowed to conduct government-related business.

This step is anticipated to additional improve buyer comfort, spur competitors and better effectivity within the requirements of buyer companies, an official assertion mentioned.

Private sector banks, that are on the forefront of imbibing and implementing the newest expertise and innovation in banking, will now be equal companions within the growth of the Indian financial system and in furthering the social sector initiatives of the government, the assertion mentioned.

“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,” it added.

The government has already introduced its intent to privatise two public sector lenders, aside from IDBI Bank, within the Budget 2021-22.

Sitharaman, whereas presenting Budget 2021-22 earlier this month, had introduced the privatisation of Public Sector Banks (PSBs) as half of the disinvestment drive to garner Rs 1.75 lakh crore.

“Other than IDBI Bank, we propose to take up the privatisation of two Public Sector Banks and one General Insurance company in the year 2021-22,” she had mentioned.

The government final yr consolidated 10 public sector banks into 4 and consequently, the overall quantity of PSBs got here down to 12 from 27 in March 2017.

As per the amalgamation plan, the United Bank of India and Oriental Bank of Commerce have been merged with Punjab National Bank, making the proposed entity the second-largest PSB.

Syndicate Bank was merged with Canara Bank, whereas Allahabad Bank was subsumed in Indian Bank. Andhra Bank and Corporation Bank have been amalgamated with the Union Bank of India.

In a primary three-approach merger, Bank of Baroda merged Vijaya Bank and Dena Bank with itself in 2019. SBI had merged 5 of its affiliate banks, State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad, and likewise Bharatiya Mahila Bank efficient April 2017.

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