Banking shares were in focus in the extended trading time on February 24 on the back of Finance Minister Nirmala Sitharaman's statement that the private banks can now participate in government business.
The Bank Nifty index climbed 4 percent intraday to hit a day's high of 36,517.4. Even the Nifty PSU Bank index was up 3.5 percent and Nifty Private Bank gained nearly 4 percent.
"The government has lifted the embargo on private sector banks for the conduct of government-related banking transactions such as taxes and other revenue payment facilities, pension payments, small savings schemes etc," said the government in its statement available on the tweeter handle of NSitharamanOffice.Earlier only a few private sector banks were permitted to conduct government-related banking transactions.
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. @FinMinIndia @DFS_India
— NSitharamanOffice (@nsitharamanoffc) February 24, 2021
"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 the latest technology and innovation in banking, will now be equal partners in the development of the Indian economy and in furthering the social sector initiatives of the government," the government said.With the lifting of the embargo, there is now no bar on RBI for authorisation of private sector banks (in addition to public sector banks) for government business, including government agency business, the statement said. The government has conveyed its decision to RBI.