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.
Source :
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