FI-promoted banks to do govt business

New Delhi: The Reserve Bank of India (RBI) is considering a proposal to allow private banks promoted by all-India financial institutions to conduct the government business, a prerogative of public sector banks till now.

Disclosing this, RBI deputy governor Dr Y V Reddy said: Besides generating competition for the government business, the induction of more players will help state governments get faster and more efficient services.

Reddy mentioned this in a speech on Economic Reforms and the Evolving Role of the RBI as Banker to the Governments, circulated during the function organised on the occasion of the silver jubilee celebrations of the Indian Civil Accounts Organisation, in his absence.

The RBI might in future consider shedding the retail banking business in relation to the government in favour of agency banks. This is in view to ensure that in the long run, the RBI will maintain only the principal accounts of the government, leaving the day-to-day banking business to the commercial banks functioning as its agents, he said.