Government is mulling to take the
proposed Post Bank of India public or gradually increase public
participation to raise funds after converting the vast post office network into
a commercial bank.
In a meeting chaired by Prime Minister Narendra
Modi last month on the findings of the Task Force on India Post,
Department of Posts (DoP) conveyed its intentions to enter the banking space
targeting rural India, sources said.
The department gave the justification that
India Post, at present, undertakes all banking operations, including payments
and has longer direct experience of banking operations as well as handling
money issues. Only the extension of credit is not a part of its current
portfolio, the source added.
A government official said: "DoP said
that once the bank is established and banking operations are running, the
entity has the potential to go public or public participation can be increased
gradually to raise funds."
Investors would be interested in the bank
considering its huge access in rural India, an area still out of reach from
other private and state-run banks, the official added.
Post office has 1,40,000 rural branches, while
all other banks put together have about 35,000 rural banks most of which are
not in rural panchayat towns.
According to the department, it has more than
100 years of experience in handling finance and monetary issues, especially in
rural areas, the official said.
"Besides, India Post has fully established 1.5 lakh business correspondents (BCs) with branch offices deployment and every post branch and postman has full local knowledge of his area, in short, he is a walking KYC Know Your Customer)," the official added.
"Besides, India Post has fully established 1.5 lakh business correspondents (BCs) with branch offices deployment and every post branch and postman has full local knowledge of his area, in short, he is a walking KYC Know Your Customer)," the official added.
India Post Task Force in its report to the
Prime Minister has also suggested a similar route. The report says the bank
should start with full government control and with an initial capital injection
of Rs 500 crore, the official added.
Modi had set up the Task Force in 2014 to
leverage the postal network in India and to enhance the role of India Post in
financial inclusion, among other services like delivery of goods for eCommerce
firms.
The report suggested that the government
should set up a holding company under the Department of Posts for immediate
roll out of banking, insurance and e-commerce services by the 1.55 lakh strong
postal network.
The panel suggested establishing Post Bank of
India as a separate entity with a branch in each district in the first three
years with initial capital of Rs 500 crore to be funded by the
government.
Post Bank of India and Prime Minister's Jan
Dhan Yojana can complement each other for financial inclusion, former
Cabinet Secretary TSR Subramanian, who headed the task force, had said.
Source:-The Economic Times
