Finance Minister Nirmala Sitharaman on Friday highlighted India’s policy response to COVID pandemic and the world’s largest inoculation drive during a meeting with her G-20 counterparts. Speaking at the virtual meeting of the G20 Finance Ministers and Central Bank Governors, she said India’s domestic policies have been based broadly on supporting citizens through measures such as credit guarantees, direct transfers, food guarantees, economic stimulus packages and accelerating structural reforms.
Sitharaman also spoke about India’s vaccination programme, which is the world’s largest and the most ambitious vaccination drive. The Finance Minister also mentioned that India has extended vaccine support to several countries, an official statement said. This was the first such meeting under Italian Presidency and it discussed policy actions for transformative and equitable recovery along with other issues on the agenda, including global economic outlook, financial sector issues, financial inclusion and sustainable finance.
During the meeting, G20 Finance Ministers and Central Bank Governors also discussed the implications of climate change on global growth and financial stability.
Bank officers’ unions on Thursday opposed the Centre’s decision to allow all private sector banks to participate in government business, including collection of taxes, pension payments and small savings schemes. In a tweet on Wednesday, Finance Minister Nirmala Sitharaman had said, “Embargo lifted on grant of Govt business to private banks. All banks can now participate. Private banks can now be equal partners in development of the Indian economy, furthering Govt’s social sector initiatives, and enhancing customer convenience.”
In a joint release, four bank officers’ unions said the Finance Minister has announced in ‘unambiguous terms’ that all private sector lenders would be equal partners and the government’s social sector initiatives which were hitherto open majorly to state-run banks and a few private banks. “Ironically, private banks are enjoying various exemptions such as priority sector lending norms, expansion of bank branches in rural / semi-urban areas, agricultural lending and so on, whereas banks in public sector space are required to comply with various norms relating to priority sector, agricultural loans, weaker sections set by RBI,” the release said.
The joint release was issued by the All India Bank Officers’ Confederation (AIBOC), All India Bank Officers’ Association (AIBOA), Indian National Bank Officers’ Congress (INBOC) and National Organisation Of Bank Officers (NOBO). The unions said state-run banks are required to lend to the borrowers from the priority sector at a much lower interest rate compared to their private counterparts, who are statutorily not required to play under the administered pricing regime.
“Opening up of the government business to such private players would thus enable them to garner float funds for augmenting their profits at the cost of much distress to poorer sections of our society,” the release said. It said while the Prevention of Corruption Act, 1988, the Central Vigilance Commission Act, 2003 and RTI Act are applicable to public sector banks, these provisions are not applicable in case of the private sector banks. Allowing private banks to handle government business would lead to a situation of absence of accountability on the part of the officers and personnel of such banks, the unions claimed.
Finance Minister Nirmala Sitharaman’s office on Wednesday announced that the embargo on grant of government business to private banks has been lifted, thereby allowing them to participate in development of the economy and social sector initiatives.
“Embargo lifted on grant of Govt business to private banks. All banks can now participate. Private banks can now be equal partners in development of the Indian economy, furthering Govt’s social sector initiatives, and enhancing customer convenience,” the Finance Minister’s office wrote on Twitter.
“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 saving schemes, etc,” a press brief released on Wednesday by the Department of Financial Services.
The decision is expected to enhance customer convenience, spur competition and higher efficiency in the standards of customer services, it said.
With the lifting of the embargo, there is no bar on RBI for the authorisation of private sector banks (in addition to public sector banks) for government business, including agency business.
Private sector banks are at the forefront of imbibing and implementing the latest technology in the banking sector, now the government will be able to leverage their innovations to further its social sector initiatives.
NSE’s Nifty index was up 36,493.90 points after the announcement, while BSE Sensex surged over 1,050 points, NDTV reported. Private banks such as HDFC, Axis and ICICI soared 4-5percent.
The government has already announced its intent to privatise two public sector lenders, other than IDBI Bank, in the Budget 2021-22. Sitharaman, while presenting Budget 2021-22 earlier this month, had announced the privatisation of Public Sector Banks (PSBs) as part of the disinvestment drive to garner Rs 1.75 lakh crore.
“Other than IDBI Bank, we propose to take up the privatisation of two Public Sector Banks and one General Insurance company in the year 2021-22,” she had said. The government last year consolidated 10 public sector banks into four and as a result, the total number of PSBs came down to 12 from 27 in March 2017.
As per the amalgamation plan, United Bank of India and Oriental Bank of Commerce were merged with Punjab National Bank, making the proposed entity the second-largest PSB. Syndicate Bank was merged with Canara Bank, while Allahabad Bank was subsumed in Indian Bank. Andhra Bank and Corporation Bank were amalgamated with the Union Bank of India.
In a first three-way merger, Bank of Baroda merged Vijaya Bank and Dena Bank with itself in 2019. SBI had merged five of its associate banks — State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore and State Bank of Hyderabad — and also Bharatiya Mahila Bank effective April 2017.
