Friday, September 30, 2011

Post office into banking: Rs 2,000-cr plan for facelift

Dear Comrades,

With an aim to metamorphose your neighborhood post office into a full-fledged bank, the Department of Posts (DoP) has approached the Planning Commission seeking Rs 2,000 crore for modernisation of postal services and its foray into the banking sector.
The plan — to materialise in the 12th five year plan period — envisages metamorphosing post offices into Postal Bank of India for disbursal of subsidies and scheme benefits.

A source told The Pioneer that in a meeting with the Plan panel recently, DoP secretary Radhika Doraiswamy has submitted the proposal in this regard. The proposal enlists interlinking of post offices across the country and setting up of ATMs. In the beginning, the department proposes to set up 5,000 ATMs in rural areas. This would be the first phase of its foray into banking sector.

In the second phase, the post offices will be overhauled into Postal Bank of India to provide the entire bouquet of banking services subject to approval from Finance Ministry and RBI. Recently, Telecom Minister Kapil Sibal had said that the Ministry wants to commercialise the department and seek a licence from the RBI to convert all post offices into banks. The source said that panel is positive on the proposal as this will take banking services to the hinterlands of the country and help in efficient disbursal of government subsidies and schemes to the targeted people.

It will also be a game changer for the fact that slow financial inclusion in rural areas is not letting the agricultural credit reach the farmers. And since postal offices are already present in deep hinterlands, turning post offices into bank is a better proposition than opening new banks. Metamorphosing postal offices will require minimal infrastructure expenditure.

Already post offices offer financial services like savings bank, postal life insurance, pension payments and money transfer services. The country has 1.5 lakh post offices. Turning post offices into full fledged banks will help the government in checking leakages in schemes like MGNREGA and various other schemes like old age pension and widow pension. Recently, rural development minister Jairam Ramesh said that post offices will be roped in for disbursement of MGNREGA wages at a charge of Rs 80 annually for every active account.

Thursday, 29 September 2011 23:50   SEEMA SINDHU | New Delhi
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