After failing to receive a
full-fledged banking licence from the Reserve Bank of India (RBI) last year,
the department of post is gearing up for a second innings. Now, India Post is looking to set
up a payments bank and is expected to put in fresh application, sources with
direct knowledge of the matter said. “India Post may look at setting up a
payments bank for which it will have to apply again, after which the RBI will
go through its own process to assess whether or not it is eligible,” a senior
government official told HT. The exercise could take a while, he added.
A payments bank can accept
deposits and remit but cannot lend. The move would help in deepening the
financial inclusion programme, sources added.The government is grappling with
the problem to delink post office savings deposits from its fiscal deficit
management programme.Interest rates on post office savings are administered by
the government, unlike commercial banks, where interest rates are market
determined.
If post offices are converted
into banks, they will have to offer competitive interest rates to depositors.
Besides it remains to be seen whether all bank deposits are offered tax
treatment, similar to post office savings, once the postal department is given
a banking licence. While the RBI did not grant a banking licence to India Post
earlier this year, it said that the postal department and the government should
look at the issue separately.
The department, for the last few
years, has remained in the red due to high operational costs. It has been
losing business due to competition from private couriers, usage of mobile
telephony and Internet. However, it has over 150,000 branches across India and
most of them are in rural areas.
Source-hindustantimes
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