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The Department of Posts could give the yesteryear Hindi film song Daakiya Daak Laayaa (Postman has brought a letter) a new twist.
The lyrics of the1970s song could well change to ‘Daakiya Loan Laayaa , Daakiya Kisht Leney Aayaa ' (Postman has brought a loan, Postman has come to collect an instalment) if the Department's plans to set up a bank pan out. So, the postman will give you money, that is loan, even if you do not get a money order from your dear and near ones!
DoP, with its formidable network of about 1.55 lakh post-offices, has identified providing banking services with special focus on rural areas and financial inclusion as the key objectives of its proposed ‘Post Bank of India (PBI)'. The Department's move could be a wake up call for commercial banks, both public and private sector, to pull up their socks and accelerate their financial inclusion programmes.
DoP will be entering the banking domain at a time when existing entities are chasing business expansion opportunities in rural India in the backdrop of banking services almost reaching a saturation point in metros and large cities.
According to the Department's blueprint, PBI will accept, for the purpose of lending or investment, deposits from the public (repayable on demand or otherwise) and allow withdrawal by cheque, draft, order or otherwise.
The PBI will ride on a core banking solution platform (pan-India interlinking of all the offices) which is proposed to be provided in all post-offices. The Department of Posts sees PBI as an additional source of revenue generation. Making a case for setting up a bank, a DoP document said the banking sector has so far not been able to provide complete coverage in the country, especially in rural areas.
Rural thrust
The Department pointed out that as on March 31, 2011, there were 171 commercial banks in India.
These banks had 93,080 branches, with only 36.10 per cent of them in the rural areas and 24.76 per cent in the semi-urban areas. The all-India average population served per branch is 13,503 (as on March-end 2011). On the other hand, of the 1.55 lakh post-offices, 1.39 lakh (or 89.8 per cent) are in the rural areas; each post-office, on average, covers 5,992 people.
“The DoP intends offering full-fledged banking services through its existing network. For this, the Department intends obtaining approvals from the Cabinet and a licence from the Reserve Bank of India for the creation of a bank,” said the DoP document.
As of December 2011, the DoP had more than 25 crore savings bank accountholders and if it gets all the approvals, then the PBI could hit the ground running and the humble postman could turn into a relationship executive.
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