Pvt can now get govt business COMMISSION PAID Embargo lifted; move TO BANKS BY RBI Type of to spur competition transaction Revised rate NIKUNJ OHRI & ABHIJIT LELE Receipts ~40 per New Delhi/Mumbai, 24 February (physical mode) transaction The Centre has lifted the restrictions on the grant Receipts ~9 per of government business to private banks, Finance (e-mode) transaction Minister Nirmala Sitharaman announced on Pension ~75 per Wednesday. All private sector banks now will be payments transaction allowed to conduct government-related banking transactions such as tax and pension payments. Payments other 6.5 paise Sitharaman in a tweet said that private banks than pension per ~100 can now be equal partners in the Source: RBI development of the Indian economy, furthering government social sector PRIVATE BANKS initiatives, and enhancing customer CAN NOW BE convenience. EQUAL PARTNERS IN “Embargo lifted on grant of DEVELOPMENT OF government business to private THE INDIAN banks. All banks can now participate,” ECONOMY” she tweeted. The move to lift embargo will spur NIRMALA competition and promote greater effi- SITHARAMAN ciency in the standards of customer Finance services, the Department of Financial Minister Services said. Turn to Page 13 > Several market players well, he added. slammed NSE for the last- The social sector pro- minute announcement. grammes of the government However, sources said regu- can be conducted through pri- latory approvals for extending vate banks as well, said Kumar. trading hours took time. When private banks get govern- Both the finance ministry ment business, they will be and the Securities and obliged to perform, he added. Exchange Board of (Sebi) “Private banks are competent sought a detailed report from to handle mandates for public the NSE as trading was halted benefit with a robust digital for several hours. backbone.” The development under- scores the importance of pri- Private banks... vate banks and their techno- logical prowess, said Prakash In a statement, the finance Agrawal, head-financial insti- ministry said the government tutions at India Ratings and has conveyed its decision to Research. This will improve the the Reserve of India flow of current account savings (RBI). “With the lifting of the account, along with pension embargo, there is now no bar accounts, improving both their on the RBI for authorisation funding and fee income, said of private banks for govern- Agrawal. To give an estimate on ment business, including gov- the size of the government ernment agency business,” funds routed through agency the statement added. banks, R K Thakkar, former Government-related bank- chairman of UCO Bank, said ing transactions include taxes taxes worth ~2-2.5 trillion are and other revenue payments, routed through agency banks pension payments, and small every month. Calling it a savings schemes. “good” decision, former bank- In 2012, the finance ministry ing secretary D K Mittal said the had not allowed private banks, RBI will now have to work out barring some, to undertake gov- the modalities. ernment business for three years. In 2015, the government had continued with the Start-ups... embargo, and allowed the pri- vate sector with existing gov- For instance, food tech plat- ernment agency business to form Swiggy, which handed continue without any fresh pink slips to over 1,400 employ- authorisation to private banks. ees after the pandemic broke For undertaking govern- out last year, has gone back to ment agency business, the RBI the 2019 hiring plans for the pays a commission to banks. March quarter, with an The carries out the increased focus on technology general banking business of the and product functions. Medium: central and state governments “Attracting the right talent through agency banks in engineering, product, data appointed under Section 45 of science & ML is our primary the RBI Act, 1934. The govern- focus while also strengthening ment transactions eligible to our business category and commission are revenue supply chain teams for our new receipts, payments on behalf of initiatives. This would be a mix the central and state govern- of both entry-level roles (15-20 ments, pension payments, and per cent) and lateral hires,” said any other item specified by the Girish Menon, head of HR at RBI. The current directive Swiggy. The need to hire aggres- relates to the central govern- sively also comes on the back ment’s business. of fundraising that start-ups “Private banks will get a have seen amid rising demand. level playing field, and get more Walmart-backed PhonePe has room for government busi- managed to reach the mile- ness,” said Prashant Kumar, stone of 1 billion monthly pay- managing director and chief ment transactions. PhonePe executive officer, . has about 700 positions to close This will also benefit cus- in 2021. “Despite the lockdown, tomers in specific instances like our headcount grew by 700 businesses and firms maintain- since the end of February 2020, HOW TO PLAY ing accounts with public sector taking our employee strength banks (PSBs) for paying tax, to 2,240,” said a spokesperson added Kumar. Now, this can be for PhonePe. done through private banks as More on business-standard.com