The Government has lifted the embargo on private sector banks (only a few were permitted earlier) for the conduct of Government-related banking transactions such as taxes and other revenue payment facilities, pension payments, small savings schemes, etc. This step is expected to further enhance customer convenience, spur competition and higher efficiency in the standards of customer services. Private sector banks, which are at the forefront of imbibing and implementing latest technology and innovation in banking, will now be equal partners in development of the Indian economy and in furthering the social sector initiatives of the Government.

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.

Government banking access: private banks may now be authorised to handle government transactions, broadening authorised banking participation. The embargo has been lifted so private sector banks may be authorised by the Reserve Bank of India to conduct Government-related banking transactions, including taxes, revenue receipts, pension payments, small savings schemes and Government agency business; the Government has communicated its decision to the RBI and there is no longer a bar on RBI granting such authorisations to private banks.