Some of the post offices may be converted to full-fledged branches of India Post Payments Bank with the objective of increasing flexibility and giving a more modernized look to the post offices.
“There is a thought process of converting some of the post offices into full-fledged payments bank branches so that both payments bank and post office-related businesses can be handled,” a source told businessline.
India Post Payments Bank currently has only one branch, which does not have a customer front. All customer services for the bank are extended only through the post offices, which are technically considered banking outlets and not branches.
“Post offices function as a bank branch but the only thing is that the processes are a little more detailed (because of the classification),” the source said, adding that the bank might have to take individual approvals for every such conversion of an outlet to a branch.
As per regulations, small finance banks, payments bank and local area banks needs to obtain prior approval from RBI’s Department of Banking Regulations (DBR) for opening, closing, shifting, merger and conversion of banking outlets.
The thought is at a nascent stage and the bank is in the process of working out a business model, for which discussions are on with the Department of Financial Services.
Banking outlets
Banking outlets are fixed point service delivery units, manned by either employees of the bank or business correspondents, which offer limited services such as accepting deposits, cheque encashment, cash withdrawal or loans for a minimum of 4 hours, at least five days a week.
Given this classification, post offices have not been permitted to exchange ₹2,000 notes following the directive for their withdrawal at bank branches, issued by the RBI on Friday. However, because the currency continues to be legal tender, post offices are still accepting deposits.
Conversion to branches, will allow post offices to offer more value-added banking services and products, and cater to more customers. In turn, it will allow the bank to customise and develop these customer touch points to provide better on-ground services.
India has a network of 1.5 lakh post offices of which 1.4 lakh are in the rural areas, as per the Department of Post’s website.