should india post get a banking license

8/12/2019 Should India Post Get a Banking License

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Should India Post get a Banking License Yes No.

Articles supporting the topic

From E-Group, Banking-News

5Why India Post should get a banking li en e

!amal Bandyopadhyay

!he "int

Published on "ay #$, %$

I' (BI wants 'inan ial in lusion, India Post, with its large ustomer base and bran h network, is the 'ittest andidate

India)s entral bank is set to open doors to a set o' pri*ate andstate-run entities in the banking spa e in +sia)s third largeste onomy !he ob e ti*e behind doing this, almost a de adea'ter the two entities were allowed to 'loat banks, is the so-

alled 'inan ial in lusion or e.pansion o' banking ser*i es in anation o' # % billion people where /&0 o' the adult populationstill does not ha*e a ess to banking I' the (eser*e Bank o' India 1(BI2 were to hoose one state-run entity to do so, it should be #53-year old India Post It had#,5/,4%% bran hes a ross the ountry as on $# "ar h, thelatest data a*ailable, the largest 'or any postal department inthe world, and lose to 3&0 o' them #,$3,&46 are in ruralIndia !his is more than 'our times the rural bran hes o' Indian banking system +s o' 7une %%, there are #65 banksin India, in luding 4% regional rural banks, and olle ti*elythey ha*e a bran h network o' 3%,##8 (oughly $60 o' it, or$$,$68, are in rural po kets 9n top o' this, India Post has 5,8$,8/3 letter bo.es strewnaround the ountry Imagine a situation where these letterbo.es are doubling up as he:ue olle tion bo.es; there will be


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a dramati hange in the banking lands ape in India I>I Bank ?td)sdeposit liability !he banking system)s deposit base is around(s 64 / trillion +part 'rom mobili@ing sa*ings through *arious s hemes, IndiaPost also sells mutual 'unds and pension produ ts and o''ersremittan e ser*i e 'rom %&5 ountries a ross the worldthrough 3,85# post o''i es It has tied up with Western


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!he argument that an go against it is its (s 6,$/6 rore loss in'is al %% as its business dropped, with emails dentingpeople)s letter-writing habit and pri*ate ourier 'irms takingaway its market share I' it annot hold on to its own business,how an it run a bankA !he main reason behind the loss is noterosion in market share but the hea*ily subsidi@ed ser*i esthat it o''ers in rural India !he subsidy *aries between66 660 in a normal rural po ket and 450 in hilly, tribal anddessert tra ts and remote *illages 9ne would imagine that thebank will not be 'or ed to o''er subsidi@ed ser*i es under theso- alled uni*ersal ser*i e obligation I' it is allowed to run its banking operations only under

ommer ial onsiderations, it is bound to su eed with itse.isting ustomer base, bran h network and rea h and e.pandbanking ser*i es to e*ery nook and ranny o' the ountry,whi h no other entity an do !he biggest asset o' India Post is its ustomer base and bran hnetwork, whi h any bank would ha*e lo*ed to own Globally,

ommer ial banks always eye the postal department)snetwork, whi h omes in handy 'or rea hing out to retail

ustomers In %&, euts he Bank +G took o*er the ontrol o' euts he Postbank +G by raising its stake !hrough this,euts he Bank added Postbank)s #/ million ustomers to its

#& million German pri*ate lients to be ome the ountry)sbiggest pri*ate se tor retail bank Cead:uartered in Bonn,Postbank was 'ormed 'ollowing the restru turing o' Germanpostal ser*i es in #33& +s both the (BI and Indian go*ernment are keen on 'inan ialin lusion, India Post ould be a *ehi le to do so, pro*ided thego*ernment allows it to ha*e a pro'essional management withe.pertise in banking and skill in te hnology I' its la k o' banking e.perien e omes in the way, India Post should tie upwith a orporate entity and ointly seek the banking li en e=tate-run insuran e behemoth ?i'e Insuran e >orp o' India1?I>2 in %& had raised its stake in the "angalore-based>orporation Bank 'rom #% %60 to %8 &%0 By doing so, ?I>

ould start selling its insuran e poli ies through the publise tor bank and >orporation Bank started using ?I>)s $,&&&-odd bran h network India Post ould do mu h more 'orspreading banking ser*i es


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5?e*eraging post o''i es 'or banking

"adan =abna*is!he Finan ial E.press

Published on +pril %, %$

!he e.tensi*e network o' post o''i es makesintegrating banking ser*i es with them a goodidea, but they la k riti al in'rastru ture andman-power skills

!he on ept o' on*erting Indian post o''i es to bank bran heso' the DP ! Bank o' India) sounds interesting gi*en ourob e ti*e o' ha*ing more new banks with a thrust towards'inan ial in lusion +s post o''i es are lo ated in more pla esthan any other publi 'a ility, it seems tempting to espousethis on*ersion Cowe*er, be'ore a epting this idea, it wouldbe 'air to really weigh the impli ations o' su h a mo*e

!he argument 'or ha*ing them ser*e as bank bran hes goesthis way !here are around # 55 lakh post o''i es, o' whi haround 3&0 are in rural areas >ompared with the 3&,&&& oddbran hes o' s heduled ommer ial banks, this is moreimpressi*e gi*en that rural bran hes a ount 'or around athird o' them, whi h, in luding semi urban bran hes, would

ome to around 6&0 Post o''i es already deal with ustomersin terms o' garnering deposits and erti'i ates o' *arious

kinds !hey ha*e around %6& million plus a ounts omparedwith the 4#& million odd a ounts held in the ommer ialbanking system !here are separate a ounts 'or "GN(EG+a ounts as well as sa*ings bank a ounts, whi h makes it:uite widespread +lso, this a ess makes it easy to ombine'inan ial transa tions o' go*ernment programmes, espe iallyso sin e there is a lot o' talk on ha*ing dire t ash trans'ers


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!heir a ounts are *alued at round (6 % lakh rore as o' "ar h%#, whi h is impressi*e gi*en that banks had deposits o' around (s 5% lakh rore +dd to this the post o''i e insuran epoli ies that are handled by this department o' around #8million with a o*er o' around (s # $ lakh rore, and prima'a ie it appears that we ha*e a re'le tion o' a Duni*ersal'inan ial institution) in pla e

But this is where the bright pi ture 'ades !he P ! departmenthad a loss o' o*er (s 6,&&& rore in F ## with all produ tsselling at a loss >learly, the department is not geared toworking on ommer ial lines and works based on thedire ti*es o' the go*ernment o' India !his leads one to thebeginning o' the train o' thought, whi h argues that on*ertingpost o''i es into bank bran hes may not be a *ery good ideaand may not probably work

First, while there is a good network o' post o''i es, their si@eand 'a ilities would not warrant su h a on*ersion gi*en thatthey are ill-e:uipped to handle any sophisti ated transa tions!he analogy an be arried to petrol stations that are lo atede*erywhere in the ountry but annot really be on*erted intobank bran hes E*en the idea o' ha*ing +!"s in these petrolstations has been abandoned o*er a period o' time sin e therewere not enough 'oot'alls and the pro e t be ame non-*iable

=e ond, post o''i es ha*e literally worked liked me hani alorganisations where the sta'' sat ba k and waited 'or

ustomers to ome in !he ustomer has ne*er mattered 'orthe sta'' and the mindset has been one o' being ine''i ient andalways seeking 'a*ours the baksheesh ulture still runs inthese o''i es right 'rom ashing in erti'i ates to deli*ery o' letters at the doorstep

!hird, the :uality o' sta'' is not o' the order that ould beremotely asso iated with banking 9' the / 8 lakh sta'' in thisdepartment as o' "ar h %#, there were around 6&& Grade-+ga@etted o''i ers and another 8,&&& odd Grade-B sta'' !heGrade-> leri al sta'' amounted to % lakh and another % 54lakh ame in as postmen alled D ak sewaks) !his means thatnot more than %0 o' the sta'' would a tually 'all under the

ategory o' being :uali'ied +nd banking is not a 'ield thatanyone an take up as it needs one to understand the produ ts


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and the regulations

Fourth, the post o''i es ha*e olle ted deposits and erti'i ateso' money whi h ha*e then been passed on to the state and

entral go*ernments as part o' the publi a ount trans'ers>an we really think o' this post o''i e sta'' a tually getting intothe a t o' lending money to those who re:uire it a'ter doing adue diligen eA !he answer is *ery learly a big no !he:uestion then is what will these post o''i es do with the moneythey olle tA 9ne option is to in*est only in Gse s, whi h iswhat narrow banking was all about Gi*en that it is a loss-making department, this does sound a *iable option I' so, willwe be happy with su h an arrangement onsidering that whenwe speak o' in lusi*e banking, we are also looking towards

hannelling lendable resour es to the more *ulnerable se tionso' so ietyA

Fi'th, the in'rastru ture needs tremendous impro*ement E*enwithin publi se tor banks, it has taken o*er %& years 'or mosto' them to a hie*e a high degree o' ore banking penetrationGi*en the limited e.pertise with sta'' and absen e o' 'a ilitieslike ele tri ity in remote *illages where these post o''i es arelo ated, post o''i e banking may not work out !here'ore, itdoes appear that there are more ompelling reasons to belie*ethat post o''i e banking is still some distan e away

!he on ept o' on*erting post o''i es to bank bran hes isertainly thought-pro*oking as there are lots o' them in theountry and their own area o' business ould be diminishing as

pri*ate ouriers, mobile phones and internet 'a ilities ha*eaught on Intuiti*ely, it looks like the spa e an be used 'or

rea hing out where the present 'inan ial system does not


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Cowe*er, 'or this, a reality he k has to be ondu ted toas ertain i' these distant o''i es really o''er the spa e andbasi amenities 'or su h a set up 9therwise, it may be a non-starter

!he author is hie' e onomist, >+(E (atings


5e king up small sa*ings

Editorial, !he Business ?inePublished on "ar h %4, %$

India Post needs to modernise its operations on par withbanks and *endors o' other 'inan ial produ ts to enable their

ustomers to transa t online

!he latest interest rates on post-o''i e sa*ings s hemes 'or%$-#/ may gi*e them a 'ighting han e against otherin*estment options, in their s ramble 'or retail 'unds !he 'i.edinterest rates being o''ered, parti ularly on longer-terminstruments, are ertainly attra ti*e in a s enario o' 'allinginterest rates Cowe*er, to 'ully apitalise on this window o' opportunity, the Go*ernment must also address onstraints onli:uidity, trans'erability and ease o' a ess that urrentlydis ourage retail in*estors 'rom parking their sa*ings with thepost-o''i e

=mall sa*ings s hemes ha*e witnessed net withdrawals o*erthe last two years, mainly be ause the returns o''ered weremu h lower than those on bank deposits and other in*estment

a*enues !he situation, howe*er, is now set to re*erse Withthe (BI utting its poli y rates by 85 basis points in the lastone year, banks ha*e re*ised their term deposit rates by asimilar degree What is more, 'urther deposit rate uts o' 5&basis points too appear likely o*er the ne.t one year, with thepressure on banks to redu e lending rates !his presents agreat opportunity 'or the Go*ernment to hard-sell small


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sa*ings instruments to retail in*estors in parti ular, thoseunder the Publi Pro*ident Fund 1PPF-4 8 per ent2 or the #&-year National =a*ings >erti'i ates 1N=> - 4 4 per ent2 whosereturns are superior to alternati*e a*enues o' in*estments,gi*en that they get ta. breaks !here are no omparableinstruments a*ailable 'rom banks 'or that tenure, and ta.-'reein'rastru ture bonds are now paying only 8-8 5 per ent Butto really get in*estors to warm up to these small sa*ingsinstruments, the Go*ernment may need to tweak their otherpatently un'riendly 'eatures

9ne deterrent ertainly is the la k o' li:uidity (etail in*estorsare o'ten wary about lo king in their sa*ings 'or the *ery longterm, as emergen ies may re:uire them to ash out at anytime !he 5-year ompulsory lo k-in 'or the PPF is a bigdeterrent In the ase o' the #&-year N=> the hea*y penalty oninterest earned results in an Dopportunity ost) 'or the in*estor!here is a ase 'or restri ting the penalty 'or prematurewithdrawal in the ase o' Go*ernment sa*ings s hemes to theta. break that an in*estor might ha*e earned In ontrast,banks are in reasingly o''ering easy 'ore losure terms ondeposits with a redu tion o' no more than a per entage pointon the pre*ailing rate o' interest 'or the duration 'or whi h themoney had been kept with the bank =mall sa*ingsinstruments are also not as easily trans'erable as

in'rastru ture bonds, whi h are traded on the market Post-o''i es need to modernise on a par with banks and *endors o' other 'inan ial produ ts su h as mutual 'unds, whi h o''ertheir ustomers the 'a ility o' transa ting online India Postneeds to e.pedite its ongoing pro e t to inter- onne t itsnationwide network o' bran hes


5Post Bank o' India is an E. ellent IdeaBig step 'orward 'or 'inan ial in lusion

Editorial, !he E onomi !imes


9/21

Published on "ar h %6, %$

!he marginal ut in small sa*ings interest rates on "onday

turns the spotlight on the post o''i e as a potential andidate'or a new bank li en e

India Post seldom 'igures in the list o' those reportedly *ying'or a bank li en e, but its redentials 'it the bill almost to a !>onsider + prime reason 'or issue o' new bank li en es is'inan ial in lusion By that riterion, India Post is an automati

hoi e

With lose to #,55,&&& o''i es, a ma ority o' them in rural andsemi-urban areas, and $& rore deposit a ounts, India Post

an do what ommer ial banks ha*e tried to o*er the years,but with limited su ess It an bring *ast unbanked se tionso' the population under the 'ormal banking network It alreadydoes *irtually e*erything a bank does, e. ept granting loans

"ost post o''i es are already omputerised and interest rateson small sa*ings ha*e been partly deregulated, so there is noreason why it annot upgrade its operations and take up the'ull gamut o' banking operations !here are enough e.amplesall o*er the world, notably in 7apan and Germany, o' post

o''i es su ess'ully o''ering banking ser*i esWhat about the stri t norms laid down by the (BI 'or grant o' new bank li en esA Will India Post be able to make the gradeAIt is ad*antageously pla ed on many ounts ability to meetthe minimum paid-up e:uity 1(s 5&& rore2, a satis'a toryHpast re ord o' sound redentials and integrity with asu ess'ul tra k re ord o' #& years and, most important o' all,it will be able to meet the re:uirement o' ha*ing at least %50o' its bran hes in unbanked rural areas with a population o' less than #&,&&&

!here is only one aspe t where India Post might 'indomplian e di''i ult the re:uirement that the bank should be

set up through a wholly-owned non-operati*e 'inan ial holdingompany But this is a problem it shares with state-owned

banks, whi h alls 'or a ommon solution It should ertainlynot be a stumbling blo k to reating a new Post Bank o' India


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5India Post needs to be ome a orporate 'or banking 'oray+ go*ernment-run entity annot ome under (BI pur*iew

"ano it =aha!he Business =tandard

Published on 7uly $, %$

"umbai, 7uly % While most o' the %6 appli ants 'or bankingli en e were usual suspe ts, there were a 'ew surprises, too+nd there was at least one unusual name, although its bankingambition was well known !he appli ation by the Indian postaldepartment, a di*ision o' the ministry o' ommuni ations in'ormation te hnology, has raised some uriosity within the(eser*e Bank o' India 1(BI2 !his is be ause (BIs new bankli en e norms released in February this year talked about newbank li en es in the pri*ate se tor

=in e India Post is a part o' a ministry, it annot be onsideredas a pri*ate se tor entity + ording to (BI sour es, to beeligible 'or a bank li en e, India Post will ha*e to be ome a

orporate entity, be ause a go*ernment department annotome under (BI pur*iew For e.ample, i' they are 'ound

*iolating the know-your- ustomer 1J >2 or anti-moneylaundering norms, how an the regulator impose penaltyagainst the so*ereign, asked an (BI o''i ial

India Post has 'or long wanted to di*ersi'y into a bank and hadheld dis ussions with (BI on this + ording to e.perts, while

the postal departments huge rural presen e de'initely gi*es itan edge to get a li en e be ause both (BI and the go*ernmentare emphasising on 'inan ial in lusion !e hni ally, there are

hallenges on whether it 'ul'ils the pres ribed riteria but itsrea h de'initely makes it a strong ontender, sour es said

+ ording to the 'inal guidelines on a new bank li en e, (BI


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te hnologi al era

With ore banking, ustomers who ha*e their sa*ings a ountin the post o''i es will be able to arry out transa tions 'romany o' the member bran h post o''i es, anywhere in the

ountry !hey will also be able to a*ail other 'a ilities likemobile trans'er o' money !he signi'i ant 'eature will be thesetting up o' Indian Post +!"s, with regard to whi h, In'osyshad already bagged the deal in +ugust %%

(esidents o' >handigarh ha*e a reason to re oi e as two +!"sare e.pe ted to be installed in the ity, with one in =e tor #8and the other in =e tor #3, a'ter the su ess'ul implementationo' >B= !he ity omes under the se ond phase o' the pro e t,along with %# other head post o''i es in Pun ab

Indian Post already has a large network rea h, where people'rom the rural se tor still 'ind it on*enient to keep theira ounts in the post o''i es +'ter the installation o' +!"s,around 53 lakh a ount holders 'rom >handigarh and Pun abwill be able to a ess their a ounts with the swipe o' a ard inthe +!"s

!he banks had ompleted the pro ess o' implementation o' ore banking by %&&4 L=BI had around #&,&&& bran hes when

it implemented ore banking It is a daunting hallenge 'or us,sin e we ha*e around #,55,&& post o''i es in the ountry,%5,&&& o' whi h are the sub-post o''i es in the rural areaswhi h do not ha*e omputer 'a ilities,L shared one o' theo''i ials

Ce added that there will not be any new re ruitments 'or theprogram and the present employees will be trained 'or the

hange

L>ore banking is the need o' the hour as Indian Posts ha*ealso been de lared partners in money trans'ers by thego*ernment !he pla es 'or installing +!"s ha*e beenearmarked whi h will be near the rural areas sin e ourma.imum onsumer base is lo ated there,L said J? Jhanna,>hie' Postmaster General, >handigarh LWith >B=, National(ural Employment Guarantee = heme 1N(EG+2 will also bestreamlined,L he added


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Should India Post get a Banking License

No


Plan panel ob e ts to go*t 'unding 'or India Post bank

=an eeb "ukher ee!he Business =tandard

Published on +ugust %, %$

!he panel opines (s 5&& rore needed as initial paid up apital'or laun hing Post Banks might not be 'easible at present

New elhi, +ugust # Copes o' the epartment o' Posts 1 oP2to laun h 'ull-'ledged banking operations seem to ha*e hit aroadblo k, with the Planning >ommission opposinggo*ernment 'unding to start the pro e t

!he oP has mo*ed a >abinet note 'or the go*ernment topro*ide (s 5&& rore as initial apital to India Post towardsstarting a bank + ording to the (eser*e Bank o' India1(BI2)s norms 'or applying 'or a new banking li en e, an entityneeds paid-up apital o' at least (s 5&& rore

9''i ials said the ommission 'elt pro*iding the (s 5&& rore


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needed as initial paid-up apital 'or laun hing the bank mightnot be 'easible, owing to the tight 'is al onditions H!hough inprin iple, the ommission does support the proposal, the

urrent weak 'inan ial onditions are a ting as a hindran e,said a senior o''i ial

9*erall, the department needs about (s #,3&& rore to run 'ull-'ledged banking operations Finan ial help 'rom thego*ernment is re:uired, as India Post re orded a de'i it o' (s5,4&6 rore in %#-#%, 4 5 per ent lower than the (s 8,433-

rore de'i it the pre*ious year +n o''i ial said India Postplanned to start banking operations a ross 5& bran hesCowe*er, a se tion within the Planning >ommission 'elt

on*erting a part o' post o''i es into 'ull-'ledged banks wouldhamper the ore 'un tioning o' these entities, another o''i ialsaid

For the go*ernment, India Post)s banking operations would bebene'i ial in e.panding the ambit o' its ambitious ire tBene'its !rans'er 1 B!2 programme !his is be ause there areabout #,5&,&&& post o''i es a ross the ountry, mu h higherthan the number o' all publi se tor bank bran hes ombined!he banking orrespondent model, as en*isaged in B!, wouldbe a ounted 'or by postmen

For e*ery new deposit, a postman would get an additionalommission o' & &8 per ent !he o''i ial said mo*es were alsoa'oot to link all post o''i e bran hes with ore bankingsolutions !o laun h banking operations, India Post wouldha*e to restru ture its shareholding, as a ording to (BInorms, promoter ompanies o' entities seeking to set up banksshould ha*e at least 5# per ent publi shareholding>urrently, India Post is wholly owned by the


15/21


5Wel ome to bank li ensing erby

!he epartment o' Post looks a winnerin a ra e in*ol*ing %6 new bank li en e appli ants

= = !arapore!he Business ?ine

Published on 7uly #%, %$

9n 7uly #, %6 horses mo*ed up to the starting line 'or the bankli ensing erby

While the media has been a ti*e in ommenting on the %6appli ations 'or new bank li en es it has, by and large, not'o ussed on the appli ation by the epartment o' Post 1+

notable e. eption is DPost Bank o' India), !he Cindu, 7uly 52

!he epartment o' Post has been, 'or :uite some time,arti ulating the need 'or the postal system to be gi*en a 'ull-'ledged bank li en e

What the media seems to ha*e missed is that the epartmento' Post has a tually applied 'or a pri*ate se tor bank li en e

India Post Bank

!he new entity would no doubt need to be in orporated, but itwould imply that the Go*ernment will ha*e a minority stake

!he epartment o' Post will need to set up a #&& per entsponsor-owned 1that is go*ernment-owned2 Non-9perati*eFinan ial Colding >ompany, and the sponsor will be re:uired toha*e a /& per ent stake in the India Post Bank whi h would


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be lo ked in 'or 'i*e years; therea'ter, the sponsor would needto redu e its share in the Bank

!he pri*ate holding would best be spread o*er a number o' institutions rather than one institution that would ha*e a

ontrolling interest +'ter a 'ew years, the new Bank wouldneed to list itsel' in the sto k market and widen its ownership

!he India Post Bank, as a pri*ate se tor unit, with only #& perent o' its o''i es operating as a bank, would ha*e #5,&&&

bran hes

!he total number o' post-o''i es are #,55,&&& and, in the initialstages, the bulk o' o''i es would need to work as e.tension

ounters o' one o' the bran hes In due ourse, the larger o' these e.tension ounters would be ome independentbran hes

=in e 3& per ent o' the post-o''i es are in the rural areas, a'ull-'ledged India Post Bank would pro*ide a ma or thrust tothe a*owed ob e ti*e o' 'inan ial in lusion

!hus, the granting o' a bank li en e to the epartment o' Postshould make it the out and out winner o' the pri*ate se torbank li ensing erby

I' there is one outstanding initiati*e emerging 'rom the 7uly #list o' appli ants 'or new pri*ate se tor bank li en es, itrelates to India Post

>ould this be a pre ursor to a shi't in the immutable poli y o' ma ority ownership o' publi se tor banksA

From E-Group, Banking-News5

Post Bank o' IndiaA

(aghu*ir =rini*asan!he Cindu

Published on 7uly 6, %$


17/21

By applying 'or a banking li ense, India Post has shown that ita knowledges the need 'or hange +nd with an e.tensi*e

network that 'ar surpasses other banks in the ountry, it isalso poised to bene'it the most with a li ense

In the laundry list o' appli ants 'or new bank li enses, %6 inall, there is a surprise andidate rubbing shoulders with the!atas, the Birlas and the +mbanis the epartment o' Posts

es, get that raised brow o' yours down, 'or i' the (eser*eBank o' India 1(BI2 appro*es its appli ation, as well it might,your 'riendly neighbourhood post o''i e will soon begin to o''erbanking ser*i es

It is ni e to see that India Post has hosen to e*ol*e ratherthan be onsigned to the dustbin o' history In a world where

hange is the only onstant, businesses, as mu h as people,need to hange with the times


18/21

in the mid-eighties when it was rather romanti to send a ni e,long inland letter 1yes, not the post ard whi h ould be readby the whole worldM2 to your girl'riend !hese days teenagerste.t rypti messages on their mobile phones whi h, I shouldsay, is rather unromanti But that)s the sub e t 'or anotherblog

!he phase-out o' telegrams 'rom 7uly #5 is another warningsignal to India Post It is only a :uestion o' time, a 'ew moreyears, be'ore physi al letters and the ubi:uitous post bo.es,whi h I used to ga@e at in wonderment as a kid, disappear !heother day, I roamed in *ain around my lo ality 'or a stand-alone letter-bo. to show to my eight-year old


19/21

'rontrunner 'or a li ense Gi*en that it is a go*ernmentdepartment, the (BI should really not ha*e any problems withthe 'inan ial soundness o' India Post

People, espe ially in the rural areas, are already 'amiliar withIndia Post; they may e*en be banking with it already =owinning redibility is not an issue unlike some o' the other bignames who are now ostling 'or a li ense

+ll that would remain then is getting the right people on boardto run a bank, putting it at arm)s length 'rom the go*ernmentand getting it well- apitalised +nd lo and behold, we an ha*ethose little red ontraptions ba k on street orners; only thatthis time you an swipe your ards there 'or ash rather thandrop a se ret inland letter to your girl'riendM I don)t know i' India Post will get a li ense or when it will open its 'irst bankbran h, but it already has its 'irst lient meM


5

India Post)s bank plans meet hurdle

+run =!he Finan ial E.press

Published on 7une #3, %$

New elhi, 7une #4 !he epartment o' Finan ial =er*i es1 F=2 has opposed the proposal o' the epartment o' Posts1 oP2 to apply 'or a banking li en e + ording to the F=,though the network o' post o''i es is large with # 55 lakho''i es a ross the ountry, they neither ha*e an inter onne tedsystem in pla e to gi*e people a ess to their money anywhere


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and at anytime like the banks, nor e.perien e in lending H+ >abinet note is being ir ulated by the oP 'or them toapply 'or a banking li en e But we are against the mo*e, asenior F= o''i ial told FE !he oP wants to start a bank initially with at least /&-5&bran hes with one or two in ea h state with a 'o us onlending to small and medium enterprises and gradually o*er aperiod o' ten years in rease the bran h network to around 4&&by going into rural areas + ording to the (BI guidelines, theinitial minimum paid-up *oting e:uity apital 'or a bank shouldbe (s 5&& rore, while the oP has sought a apital o' (s#,3&& rore 'or its banking *enture, sour es said !he F= o''i ial, howe*er, said the oPOs plan seems Hhal'-baked as it was Hnot lear on how they will e*ol*e a systemlike the banks ha*e to help their depositors a ess moneyeasily anywhere at anytime HBanking is a di''erent ball game altogether It will re:uire alot o' training 'or the post o''i e sta'' to learn the rules It willnot be easy 'or oP to run a 'ull-'ledged bank, the o''i ialsaid, adding that a la k o' e.perien e in lending is also adrawba k 'or the oP

!he oP, howe*er, is keen to submit its appli ation to the (BIbe'ore the 7uly # deadline and the bank will be set up athrough a wholly-owned Non-9perati*e Finan ial Colding>ompany 1N9FC>2 !he oP had taken the help o' onsultan y'irm Ernst oung in preparing its strategy H!he main bene'it1in gi*ing a bank li en e to oP2 is that it will help boost the'inan ial in lusion plan, said +sh*in Parekh, national leader1global 'inan ial ser*i es2, Ernst oung !he >abinet notewas prepared on the basis o' the Ernst oung report !he oP intention is not to on*ert all its post o''i es intobanks, but wants a separate banking entity 'or whi h it hasde ided to hire a separate team o' pro'essionals, sour es saidIt has already spent around (%&& rore in the last 'our yearsto put up a ore banking solutions-like system in pla e, theyadded


21/21

In identally, the go*ernment had started a (s /3&3 rore-worth in'ormation te hnology-dri*en pro e t to modernise thepostal network !he go*ernment had allo ated (s 5$% rore in%$-#/ to make post o''i es a part o' the ore bankingsolution and help it o''er real time banking ser*i es !he oP also pointed out that the post o''i es rea h e*en theremote orners o' the ountry as the network in ludes # / lakhpost o''i es in rural areas, #5,&&& in urban areas and another$&,&&& points o' presen e Post o''i es already o''er many'inan ial ser*i es 'or urban and rural people in luding sa*ingsa ounts, re urring deposit a ounts, monthly in omes hemes, publi pro*ident 'und, time deposits, senior iti@enssa*ings s heme, national sa*ings erti'i ates and postal li'einsuran e Besides, post o''i es also o''er money remittan eser*i es, distribution o' mutual 'unds and se urities and arealso pro*ide ele troni international money order ser*i e and'ore. ser*i es !he oP also pro*ides ser*i es on the new pension s hemeand retail ser*i es su h as sale o' 'orms and bill olle tion !he

oP is also a go*ernment agent 'or pro*iding ser*i es on"ahatma Gandhi National (ural Employment Guarantee= heme wage disbursement and old age pension payments

should india post get a banking license

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