The Hindu Business Line : Postal department plans `full-fledged bank'

Kolkata June 16 The Department of Posts is planning to set up a "full-fledged bank", and talks in this regard have been initiated with the Union Finance Ministry.

The proposed banking outfit is likely to be labelled `Post Bank of India', according to Dr Shakeel Ahmad, Union Minister of State for Communications and Information Technology.

Speaking at a function here today to announce a business tie-up between the Department of Posts, West Bengal Circle, and HDFC Bank, Dr Ahmad said the country's postal administration was already offering a host of financial services, such as sale of mutual funds and collecting foreign exchange remittances from abroad.

The idea now was to leverage its network of 1,55,000 post offices located across the country and embark upon "full-fledged banking operations" including credit operations. The proposal has already been taken up with the Union Finance Ministry.

`Hub of activities'

Dr Ahmad said the Postal Act would be amended with a view to making the post offices "the hub of many types of activities".

The ban on recruitment in government sectors has been lifted and Rs 6,000 crore has been earmarked for computerisation of post offices across the country.

According to him, the Department of Posts has also taken up with the Union Finance Ministry the issue of low interest rates on small savings.

HDFC Bank, on Saturday, entered into a tie-up with the Department of Posts, West Bengal Postal Circle, for disbursement of loans against postal securities.

Holders of postal securities such as National Savings Certificates (NSC) and Kisan Vikas Patras (KVP) can avail themselves of loans from HDFC up to 90 per cent of the value of the NSC or KVP.

In this regard, the minimum loan amount has been pegged at Rs 25,000, and it will be offered in the form of overdraft facility and customers will be given a chequebook and ATM/debit card to operate the account.

Interest will be charged only on the amount utilised by the customer.

According to an HDFC spokesperson, the tie up with the Postal Department would enable the bank to access remote and interior parts of West Bengal and offer services to customers in semi-urban and rural areas through the post office network.

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