PRESS NEWS:
A
task force set up by Prime Minister Narendra Modi to review the
operations of India’s postal department has mooted the creation of a
full-fledged Postal bank.
The
panel is headed by former cabinet secretary, TSR Subramanian and
comprising of experts that includes former Infosys board member TV
Mohandas Pai,
The
recommendations will be submitted to the government soon, according to a
government official in the know of the development. In fact, the task
force has recommended to launch the proposed Post bank through an Act of
the Parliament and not by approaching the Reserve Bank of India (RBI).
“The
task force has is not in favour of permitting India Post to run a
payments bank but wants the department to run a full-fledged commercial
bank, which it believe will help push the cause of financial inclusion
in the country,” the official said.
An
announcement in this regard is likely to be made as early as
Thursday at Dak Bhavan, the headquarters of department of postal
services in Delhi, the official said.
The
task force, set up in August, has also made several other
recommendations to leverage the vast network of India Post and its local
knowledge across regions in India, the official said.
For
India Post, which has been cherishing the dream of becoming a bank, the
Subramanian panel recommendation will be a huge boost for its demand
for a full service banking permit.
The
Postal department, which was among the 25 contenders for a full service
banking licence last year, didn’t get into the final list since the UPA
government at the time wasn’t keen on backing the move and refused to
provide the department with the minimum capital required to set up a
commercial bank.
Last
year, while issuing licenses to IDFC and Bandhan, the RBI had observed
that India Post can be given banking licence if government, technically
the promoter of the proposed Post bank, gives its nod.
India
Post has argued that the department’s entry to banking can contribute
massively to the cause of financial inclusion, or the process of
spreading banking services to the unbanked population of the country,
using its vast network of 1,55,000 post offices.
Of
its total network, about 1,39,040 post offices are in rural areas.
Going by a 2011 estimate of the postal department, about 6,000 people
are covered on average by post-offices in rural areas and about 24,000
in urban areas.
Through its various saving schemes, Postal department handles deposits to the tune of Rs 6,00,000 crore.
As Firstbiz noted
earlier, India Post’s entry into banking can be game changer in rural
banking given the massive reach of Post in the far-flung areas of the
country and local knowledge.
The
department has already commenced the process of linking all its
branches through technology, besides setting up ATMs across the country.
The
development has come at a time the RBI is opening up the banking sector
to differentiated banks or banks with specific areas of focus such as
payments banks and small banks. Payment banks can engage in accepting
small deposits, offer ATM/debit cards, payments and remittance services
through various channels. They can also offer financial products like
mutual fund units and insurance products.
Small
finance banks, on the other hand, are almost like full service
commercial banks. However, these banks cannot engage in large value
transactions since 75 percent of their loans must be lent to the
so-called priority sector. For existing banks, this requirement is 40
percent. Also, at least 50 percent of their loan portfolio should
constitute loans and advances of up to Rs 25 lakh.
India
Post, however, is not keen to set up a small bank or payments bank and,
instead, wants a full service banking licence, the official quoted
earlier said.
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