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So far, the facility was limited to only three private sector -- ICICI Bank, HDFC Bank and Axis Bank.
"... it has been decided that all private sector banks will now be considered eligible to handle any Central/State Government business (where RBI pays agency commission) at par with public sector banks," RBI said in a circular.
It said the decision is aimed at enhancing the quality of customer service in government business through more competition.
The move will improve customer convenience by increasing the number of customer service outlets and broad basing the revenue collection and payments mechanism of governments, the central bank said.
The new rule comes with immediate effect, the RBI said.
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