FM Sitharaman's office today announced that private banks will also be allowed to participate in government businesses. So far these were the forte of public sector lenders.
"Embargo lifted on grant of government business to private banks. All banks can now participate," said the finance ministry in a statement on social media.
On the media, Bank Nifty saw traction in today's trading after the FM's comment. Trading in today's session was extended as there was a halt on the NSE due to technical glitch."Private banks can now be equal partners in development of the Indian economy, furthering government's social sector initiatives, and enhancing customer convenience," it further added.
And so now, the release gives private lenders equal opportunity to be involved in "conduct of government-related banking transactions such as taxes and other revenue payment facilities"."This step is expected to further enhance customer convenience, spur competition, and higher efficiency in the standards of customer services," it added.
"I welcome this progressive reform. It will enable the banking sector to serve customers better. Private and public sector must both work towards sustainable development of India," Uday Kotak, Managing Director of Kotak Mahindra Bank, said.