NEW DELHI: The expenditure department has decided to sanction Rs
1,300 crore to the proposed Post Bank of India to meet its capital
requirements even as the department of financial services (DFS) - the
wing in the finance ministry that deals with state-run banks and their
poliiies – chose to stay away from the issue.
The proposal's backing by the expenditure finance commission and its
subsequent green light by finance minister P Chidambaram is seen as the
official go-ahead by the finance ministry, ignoring the DFS's stance.
The DFS position is seen as the first instance of the agency not backing
the Post Bank's plan, which officers in the department have privately
mocked at.
"They think they can use the postal deposit model for their banking
foray. Nothing in their plan seems to be clear. Banking isn't easy,"
said an officer, who did not wish to be identified. In fact, a strong
Post Bank is seen to be the biggest challenge to existing public sector
banks, including State Bank of India, which controls 70% of the banking
business in the country. SBI, the largest lender, has a little less than
15,000 branches, while there are over 1.5 lakh post offices across the
country.
Although Post Bank does not intend to open a bank branch in each post
office, the plan is to use postmen to meet the financial inclusion
goal. Secretary (posts) P Gopinath refused to speak to TOI despite
several attempts.
According to the plan, Post Bank will have 50 branches in the first
year, which will be increased to 150 by the fifth year. The branches
will be located in select Head Post Offices in Tier-1-4 centres and
select Sub-Post Offices in Tier-5-6 centres.
To meet RBI norms, the postal department proposes to set up a new
entity - Post Bank of India - that will have an independent board and
separate operations. Apart from independent directors, the board will
have representatives from the finance ministry and the postal
department. Separate recruitment has been planned to have specialist
bankers.
While converting the entire postal network would have meant a capital
requirement of over Rs 60,000 crore, by setting up a special entity,
the fund requirement has been reduced. This, officers said, will also
help create a more focused strategy.
Source : http://timesofindia.indiatimes.com/ dated 22/07/2013
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