Private sector banks to conduct Government-related banking transactions
Part of: GS Prelims and GS – III – banking; Economy
- The Government has lifted the embargo on private sector banks for the conduct of Government-related banking transactions.
- These will include taxes and other revenue payment facilities, pension payments, small savings schemes, etc.
- Only a few banks were permitted to carry out these functions earlier.
- Besides, there is now no bar on RBI for authorization of private sector banks for Government business.
- For undertaking government agency business, the RBI pays a commission to banks.
- The Reserve Bank of India (RBI) carries out the general banking business through agency banks appointed under Section 45 of the RBI Act, 1934.