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The marginal cut in small
savingsinterest
rates
on Monday turns the spotlight on the post office as a potential candidate for a
new
bank licence.
India Post seldom figures in the list of those reportedly vying for a bank licence, but its credentials fit the bill almost to a T. Consider. A prime reason for issue of new bank licences is financial inclusion. By that criterion, India Post is an automatic choice.
India Post seldom figures in the list of those reportedly vying for a bank licence, but its credentials fit the bill almost to a T. Consider. A prime reason for issue of new bank licences is financial inclusion. By that criterion, India Post is an automatic choice.
With
close to 1,55,000 offices, a majority of them in rural and semi-urban areas,
and 30 crore deposit accounts, India Post can do what commercial banks have tried to over the years,
but with limited success.
It can
bring vast unbanked sections of the population under the formal banking
network. It already does virtually everything a bank does, except granting
loans.
Most post
offices are already computerised and interest rates on small savings have been
partly deregulated, so there is no reason why it cannot upgrade its operations
and take up the full gamut of banking operations.
There are
enough examples all over the world, notably in Japan and Germany, of post offices successfully
offering banking services. What about the strict norms laid down by the RBIfor grant of new bank licences? Will India Post be able
to make the grade?
It is
advantageously placed on many counts: ability to meet the minimum paid-up
equity (Rs 500 crore), a satisfactory "past record of sound credentials
and integrity" with a successful track record of 10 years and, most
important of all, it will be able to meet the requirement of having at least
25% of its branches in unbanked rural areas with a population of less than
10,000.
There is
only one aspect where India Post might find compliance difficult: the
requirement that the bank should be set up through a wholly-owned non-operative
financial holding company.
But this
is a problem it shares with stateowned banks, which calls for a common
solution. It should certainly not be a stumbling block to creating a new Post Bank of India.
Source : The Economic Times, 26 March, 2013
