The postal
department has appointed Ernst & Young as consultant for the project and
based on the detailed project report, it will approach the Union cabinet for a
final go ahead.
NEW DELHI: The Reserve Bank of India having opened the window for new
bank licences, the postal department is finalizing the blueprint to
set up a bank of its own at yourneighbourhood post office, a move that
will challenge the dominance of large public sector lenders in smaller towns
and rural India.
While the department already has a
balance sheet of Rs 6.18 lakh crore, which includes deposits of around 5.5 lakh
crore, it is expected to set up a new entity that will function as the bank.
Transferring the existing deposit base to the bank or converting the entity
into a bank will entail an initial capital base of around Rs 55,000 crore to
meet RBI's requirement, which the government will find difficult to provide. So,
the proposed bank will start with the minimum capital requirement of Rs 500
crore, said a source familiar with the development.
"This will benefit rural areas
enormously. There are nearly 1.55 lakh post offices and no capital cost of
building is required. We are connecting post offices. As it is, we are offering
savings bank in post offices and this is a natural progression. The matter is
under discussion with the finance ministry and RBI," communications and IT
minister Kapil Sibal told
TOI.
The postal department has appointed
Ernst & Young as consultant for the project and based on the detailed
project report, it will approach the Union cabinet for a final go ahead.
A source said that the new entity
will have its own board and guidelines that comply with RBI regulations.
Although there are several examples of postal departments getting into banking
— ranging from the German and Italian model, to those in South Africa and Japan
— sources said the India model will be a lot different given the country's vast
geographical spread and low level of banking penetration.
Among the various suitors, the
postal department has one of the strongest cases to set up a bank given its
massive reach across the country with 1.53 lakh post offices, almost all
offering savings bank facilities. In all, there are 23.3 crore savings bank accounts
with deposits adding up to Rs 3.8 lakh crore at the end of March 2012. "In
a way it is already a savings bank. All that we want to do is make it a
commercial bank," said a source.
The plan is to penetrate rural areas
and smaller towns, which is also in line with the government's stated aim of
offering banking facilities in the hinterland. Over a period of time, services
such as investment banking will be added so that the bank becomes a
full-fledgedfinancial services entity.
The postal department has already
initiated steps to connect post offices through an electronic network, which
will be useful while setting up a bank. Connectivity ensures that customers can
transact business through any branch in the country. It has also ordered the
procurement of over 800 ATMs
But manpower issues are going to be
a big challenge. "Getting direction is one thing, developing or procuring
capability is another thing altogether. If the regulator is convinced,
capability will follow," said Ashvin Parekh, partner and national leader
for financial services at consulting firm E&Y. Parekh, however, refused to
discuss the issue further as his firm is advising the postal department on its
banking foray. Source
Times of India 14 March 2013.
