What changed
Previously, only public sector banks and three private banks (ICICI, HDFC, Axis) could conduct Government business as RBI agents. Now, all private sector banks are eligible to handle any Central/State Government business where RBI pays agency commission, at par with public sector banks.
What it means for you
This expands the network of banks for Government transactions, increasing competition and customer convenience. Banks must still be formally appointed as RBI agents through a proposal process involving CGA (for Central) or State Finance Departments (for State). Prefunded schemes are excluded from this arrangement and don't require RBI approval.
What you must do
- If you are a private sector bank, initiate the agency appointment process with RBI via CGA (Central) or State Finance Department (State) for Government business.
- Ensure your bank meets all operational and compliance requirements to handle Government transactions.
- For existing agency banks, obtain fresh/additional business approvals from DGBA, CO as before.
- Coordinate with CGA or State Finance Department for mode (Physical/e-Mode) and area of operation post-RBI authorization.
Who it affects
All scheduled commercial banks in India, Private sector banks (newly eligible), Public sector banks (existing agents), Central Government Ministries/Departments, State Governments, Controller General of Accounts (CGA)
Which private banks were previously allowed to handle Government business?
Only ICICI Bank Ltd., HDFC Bank Ltd., and Axis Bank Ltd. were appointed as RBI agents for limited Government business before this change.
Do prefunded schemes require RBI approval under this policy?
No, prefunded schemes do not fall under Government agency business and do not qualify for RBI agency commission. Central/State Governments can engage any bank for such schemes without RBI reference.
What is the process for a private bank to become an agency bank for Central Government business?
The concerned Ministry/Department works out the arrangement with the bank, sends the proposal to CGA for examination, who forwards it to RBI's DGBA, CO. RBI then appoints the bank as an agency bank upon agreement execution.