Private banks allowed to undertake agency jobs for central and state govts without any fresh approval: RBI

Private banks, which worked as agency banks for government businesses prior to 2012, are allowed to undertake such agency jobs for central and state governments without any fresh approval, said the Reserve Bank of India. Banks seeking fresh approval from RBI for government agency businesses should be healthy and are not under prompt corrective action framework or moratorium at the time of making the application or signing of the agreement with RBI, the central bank said. At present, no private bank is under PCA. The government had in September 2012 put an embargo on further allocation of government business to private sector banks. The Department of Financial Services lifted the ban in February this year. But these banks would need to tap RBI for fresh approval if they look to do additional government agency businesses. RBI would review the performance of the agency banks, on a matrix of various government initiatives and schemes. Banks may lose these businesses in case they cannot perform well.