New Delhi: Apex industry body
ASSOCHAM has come out in support of the proposed setting up of India Post as a
rural banking structure to push financial inclusion in the country’s
hinterland, claiming several benefits to the economy in this move, including
raising domestic savings and investment levels.
Terming
this bank proposal as a potential “game changer as a conduit not only for
financial inclusion but to induce socio-economic change”, The Associated
Chambers of Commerce and Industry of India (ASSOCHAM) listed several benefits
like low cost of operation and “as one great opportunity to achieve higher
growth rates of household and domestic savings and investment.”
ASSOCHAM
has submitted a detailed study on the proposed India Post Bank making several
suggestions for its effective functioning in a shift to core banking operations
from merely handling savings accounts. It underlined India Post’s claim that
its savings schemes already handling over Rs 6,05,697 crores annually with over
28 crore accounts in its various savings schemes.
Among the suggestions of ASSOCHAM was linking of MGNREG and
other government payments in rural areas through this India Post Bank, handling
the five million SHG units, linkages with the proposed Women’s Bank with at
least one woman employee in each post office bank branch, use of PSU banks’ training
facilities and bringing India Post bank under one or the other PSU bank for
operational oversight in each zone.
Pointing
out that rapid urbanization and internal migrations have raised annual
remittances from urban to rural areas to a record Rs 70,000 crores and the
rural jobs scheme MGNREG is pushing Rs 40,000 crores into villages every year,
ASSOCHAM said the India Post with its 1,39,086 rural post offices , one for
every cluster of five villages, and 2,63,467 Gramin Dak Sevaks is best suited to
tap into this flow and raise domestic savings. “This is a huge resource at hand
and touches almost every part of the country’s interior” the chamber said.
It
also noted other areas of rapid rise in rural incomes like higher minimum
support prices for various commodities both food grains and commercial crops
and National Livelihood Mission in rural areas. Business and industry were now
focusing on the emerging rural market as a new opportunity, the chamber said
quoting its own previous studies on rural markets and other recent studies.
Some five million new general stores have come up employing over 8 million
people in rural areas in the last five years according to its study.
“Even
just Rs 100 per household saved every month could bring over Rs 12,000 crores
from the 45 per cent of unbanked households in rural areas” ASSOCHAM asserted
listing what the postal structure could achieve if properly utilized.
India
Post was already handling a number of financial schemes in villages like
National Small Savings, Recurring Deposits, Public Provident Fund, Postal
Insurance, etc. In recent years as many as 4 crores of MGNREG accounts were
also handled through post offices for payment of wages, forming over 40 per
cent of the MGNREG funds for job entitlement scheme. The chamber underlined the
fact that in the financial aspect of India Post it was handling a currently
outstanding balance of Rs 6 trillion (lakh crores), an enormous potential for
savings and investment at the grass root level.
ASSOCHAM
study also noted the changes occurring in India Post with rapid adoption of
information technology, commercial operations in acting as sales agent for many
items making it already“technology enabled, self-reliant market leader” through
its IT project 2012. The chamber said this change has enabled it to venture
into rural banking beyond merely acting as a conduit for remittances from urban
to rural areas (and also vice versa) and running savings accounts.
The
proposed India Post Bank should enter into core banking operations. ASSOCHAM
suggested the new structure for it be linked to a public sector bank for a
limited period to gain training and oversight on core banking operations
through the existing and additional employees. ASSOCHAM suggested linkage with
the proposed Women’s Bank with rural postal bank offices employing at least one
woman in each post office bank branch. The chamber also said that low cost of
operations that held the key to success in handling rural banking especially
among the bottom of the pyramid people was a major advantage for the India Post
in its new avtar as a bank.
ASSOCHAM
has also suggested linking the Self-Help Groups also to the proposed India Post
Bank for disbursal of loans to promote small and micro businesses.
The
Central Government at present had to provide budgetary support of Rs 6,000
crores annually to India Post to support its operations. The chamber was
hopeful that with the proposed extension into rural banking operations, India
Post would no longer require such support and Government could save this annual
outgo besides creating an infrastructure to draw domestic savings from the
rural areas where a major transformation was already underway.
ASSOCHAM
also released a companion study on “Rural Employment” that revealed a
significant shift in employment in villages away from agriculture into new jobs
especially in construction sector, growth of several thousand “census towns”
that provide new focus for industrial and business activities serving and
drawing from villages around and relentless rise in rural wages especially
backed by MGNREG jobs scheme and investments in roads, houses and healthcare
under the Bharat Nirman programme.
Source : http://www.orissadiary.com
