A long-pending dream of
India Post to have banking operations is now taking a final shape. The
Department of Post has
moved a Cabinet note with the government providing Rs 500 crore as seed
capital to India Post for this purpose. This is the minimum paid up
capital required under the final norms for banking licenses put up by
the Reserve
Bank of India.
Financial help from the government is needed since India Post ran a
deficit of Rs 5,805.9 crore in 2011-12, though 8.5% lower than Rs
7,899.3 crore in the previous year.
India Post plans to start banking operations in 50 branches, a key official said.
The official said all the initial work on applying for a banking license to
RBI has been completed and the only task left now is to formally submit its application.
The deadline for submitting applications is July one and in between only two working days are left.
"Our officer is in Mumbai and we will file the application before the deadline," the official said.
When asked that it would be too costly an affair to convert a
post office into a bank, the official explained that both post office work of India Post and banking operations will simultaneously exist.
She said India Post can always squeeze a little space in its
existing post offices. "We can give the bank a completely different
branding and so the bank and post office can coexist ," she said.
"That little space for bank branches will be built from the scratch.
But, the existing infrastructure across 1,50,000 post offices will be
leveraged. We are naturally the most fit candidate to open a bank as no
one can match the department's reach," the official said.
She said India Post has around 1,50,000 post offices, while all the
other bank branches combined would come to around 50,000 only.
"So, other aspirants have a reason to worry, but we qualify RBI's eligibility criteria in all respects," the official said.
When other private banks can have a lean and mean approach in terms of
bank branches and can still be successful, so can India Post, the
official asserted.
But, the idea is to not to open branches across all the 1,50,000
post offices, but have a selective play. "If we cover the entire
network, it will be too extensive, therefore we will open in places
where there are not other banks etc. And our post man could act as a
banking correspondent enabled with micro-ATMs," she said.
To become a bank, India post will have to restructure its
shareholding. There is a stipulation in the RBI's norms that promoter
companies of entities wishing to set up banks should be 51% held by the
public. At present, India post is 100% government of India holding.
India Post has long nursed an ambition to start a bank, called Post Bank of India.
Earlier, the finance ministry is understood to have opposed India
Post’s plan as the postal service doesn’t have the expertise needed in
relevant areas, such as handling credit.
The Department of Post has a few savings instruments like post
office savings scheme, besides acting as a distributor for mutual fund
companies. It also has a life insurance scheme— Postal Life Insurance.
India Post's plans will also help the UPA’s ambitious Direct
Benefits Transfer (DBT) Scheme as the programme falters because of poor
last mile connectivity of banks.
The official said the banking correspondent model as enshrined in
DBT will be performed by postman. He will get an additional commission
of 0.07% over and above his regular salary for every new deposit. The
official said that moves are also afoot to link all post office branches
with core banking solutions (CBS), which would further enable them to
function as a full-fledged bank.
Source : http://www.business-standard.com/
[http://www.business-standard.com/article/economy-policy/next-time-you-go-to-the-post-office-it-may-well-turn-out-to-be-a-bank-113062700753_1.html]
