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 your neighbourhood post office, a move that will challenge the
dominance of large public sector lenders in smaller towns and rural India.
"This will hugely benefit rural areas. There are nearly 1.55 lakh post
offices and no capital cost of building is required . As it is, we offer
savings in post offices, this is a natural progression. The matter is under
discussion with the finance ministry and RBI," communications
miniter Kapil Sibal told TOI.
The postal department has appointed Ernst & Young as a consultant for the
banking project and based on the detailed project report, it will approach the
Union cabinet for a final go ahead to set up a bank.
After cabinet clearance, RBI will decide on whether India Post should be given
a banking licence. While the department already has a balance sheet of Rs 6.2
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.
Asource said the new entity will have its own board and norms that comply with
RBI regulations. Although there are examples of postal departments getting into
banking — ranging from the German and Italian model, to those in South Africa
and Japan — sources said 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 1.5 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 like investment banking will be added so that the
bank becomes a full-fledged financial services entity.
Source : http://economictimes.indiatimes.com
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