Private sector banks to conduct Government-related banking transactions

Private sector banks to conduct Government-related banking transactions

Part of: GS Prelims and GS – III – banking; Economy

In news

• The Government has lifted the embargo on private sector banks for the conduct of Government-related banking transactions. 

Key takeaways 

• 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.

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