Let the postman turn banker: India
Post deserves to get a bank licence
India Post wants to own a bank. This
is a great idea. In one stroke, this can ensure that millions more will get
access to formal credit, in one of the most under-banked countries of the
world.
The biggest advantage for India
Post, among the most enduring institutions set up by the British, is its huge
network and customer base. Compared to roughly 1,00,000 commercial and rural
bank branches in India, there are 1,55,000 post offices, a majority in rural
and semi-urban areas. As a collector of small savings, it has experience in
taking deposits — about Rs 6 lakh crore at last count — but not in lending. A
bank licence for only India Post would mean that the network of bank branches
would more than double in one stroke.
India Post also fits the bill on other
counts: a long track record of integrity and, most important — with one post
office for every four villages — a massive presence in rural India, where the
RBI wants 25 per cent of all branches to be located. Forget
microfinance companies, even compared to government-owned banks, the
postal bank's cost structure, if it assigns some banking duties to postmen,
will be lower.
India Post wants the government to
sanction around Rs 1,300 crore for capital adequacy and to hire more people. It
should get the money. The RBI wants new banks to be set up through a
wholly-owned non-operative financial holding company. So, the postal bank will
need to be corporatised. It should run on sound commercial principles and at
arm's length from political masters.
Post offices in countries like
Germany and Japan have successfully offered banking services. There is no
reason why it cannot be done here. Many post offices are already computerised.
These machines should be upgraded with banking software. A bank, trusted by local
communities, will also make it easier to implement the direct transfer scheme.
All that needs to be done is to give
a mobile device, a micro ATM, to the postman who can double up as a banking
correspondent. The RBI needs to think innovatively about inclusive banking and
spreading the reach of formal credit where there is none, now.
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