More private sector banks should be engaged in the agency business of the central and state governments for speedy implementation of various subsidy schemes, according to industry body Assocham.
In a letter to Finance Minister Arun Jaitley, Assocham said, induction of additional private sector banks will widen reach of the private sector banks in providing financial services at lower cost with greater convenience to consumers.
Initially, only ICICI Bank, HDFC Bank and Axis Bank were permitted to act as agency bank with a plan to include more in a phased manner.
Though RBI authorised all private sector banks to handle government business as agency banks in January 2012, Assocham said, “The process of this in various states has since been in abeyance without any decision making on this front.”
“This will also enhance utilisation of Jan Dhan accounts and for larger convenience of a tax payer, he should be allowed to remit taxes from his main account instead of only relying on 3 empaneled private sector banks,” it added.
Assocham has also suggested various criteria for empaneling additional private banks which includes those having net worth of Rs 5,000 crore (as on March 31, 2014) together with a paid up capital of Rs 200 crore.
It also said, the bank should have capital adequacy ratio of nine percent and net non-performing assets being lower than or equal to two per cent of total advances among others.