The dream of Indian post office to be the largest bank of the country may come true in the upcoming days as the Department of Post has started consultation with the government to get fund for the banking operations.
The Department of Post requires Cabinet approval of fund around Rs 1,900 crore to start Post Banks in the country. It needs the minimum Rs 500 crore paid-up capital under the final norms for banking licences issued by the Reserve Bank of India. It is planning to start banking operations in 50 branches.
The initial work to get the licences has been completed. The only task left is to submit the application, which will be done by July 1.
The banking service by the post office is a long-pending dream of the Department of Post. Also Union Finance Minister P Chidambaram in the budget 2013 had proposed to provide Rs 532 crore to modernise the country’s postal network aiming to offer core banking solution and real time banking services.
The Post Banks will be owned by Department of Post but will have a completely independent board, governance structure and operations. The board will comprise officials from the ministries of finance, communication & IT. The department of posts has already appointed Ernst and Young as consultant for proposed ‘Post Bank’.
The department aims to open the banking services in the first phase in the small cities with the focus on rural and retail micro, small and medium enterprises. The postal department has a strong rural presence and is already into the small savings scheme. It is already into various financial services, including small saving schemes, postal insurance, forex services, money remittance services etc. Currently, there are 1, 54,822 post offices in the country. Of these, 1, 39,086 are in rural areas and 15,736 are in urban regions.
However, there is a little doubt over the efficacy of the post office being converted into a bank. We may witness another Japan-like case where the postal department, which works like a bank, may not be used for posting drafts, letters, or official documents. Whatever it is, but the financial inclusion in the department will be beneficial for common people. It may record more saving accounts than other government undertaking and private banks.