this story originally appeared in on sep 20 2012 new delhi the government may have unleashed reform measures to attract foreign investors into retail and aviation but it is quietly batting for the staterun banks denying private sector banks its lucrative agency business in a letter to the reserve bank of india rbi the finance ministry has said that for the next three years no private sector bank will get the agency business of the centre and states pegged at about rs 20000 crore this business could rise exponentially as the government shifts to direct transfer of social benefits the ministry has also threatened to gradually stop the government business handled by hdfc bank icici bank and axis bank if they fail to meet the specified conditions finance minister has approved the new guidelines and rbi has been further directed to do a comprehensive review of the policy of authorisation of government business to private sector banks said a government official requesting anonymity the agency business includes collection of direct and indirect taxes disbursement of central government pensions and expenditure related payments of the state and central government earlier this year rbi had suggested all privatesector banks apart from axis bank icici bank and hdfc bank that were already allowed in 2003 should be considered for handling central and state government business the first lot of banks were selected on the basis of financial parameters such as profitability nonperforming assets npas their record in meeting prioritysector targets and implementation of government schemes the decision was taken after it was found that the three privatesector banks did not achieve the targets fixed by the rbi for undertaking government business a finance ministry official said staterun banks had also been putting pressure on the finance ministry that since they were bearing the burden of governments social goals they must get its business as well it is the staterun banks which are working on financial inclusion targets and effectively we are in a better position than private banks said an executive director of a state run bank the government however will allow the existing contracts of three banks hdfc axis and icici bank continue provided that they meet the key milestones rbi will ask for a road map from the banks which will clearly state the targets require to achieve set targets for priority sector lending and satisfactory implementation of government schemes the above quoted official said in case the three banks fail to meet targets rbi may also indicate a phased plan for withdrawing government business from these banks an official with a private sector bank said that the move is regressive one one hand we are talking about more licenses for private banks while restricting opportunities for existing he said government agency business means more opportunities for banks besides generating fee income