POST BANK OF INDIA SANS POSTAL EMPLOYEES
It seems that the Post Bank of India (PBI) may become a reality in
the near future. For the last more than fifteen years we have been told
about the Post Bank and even the Parliamentary standing committee on
Communications & IT has repeatedly demanded the Government for
commencing Post bank. Several attempts have been made, but the Finance
Ministry always took a negative stand, for one reason or the other.
Majority of the bank managements including nationalized banks have been
opposing the entry of the Postal department into commercial banking. The
reason is obvious. They foresee a potential threat to their existence
once Post Bank enters into their field and during the course of time the
Post Bank may become one of the biggest Bank.
Post Bank of India will be an independent entity, separate from the
current operations of small savings schemes being carried out by the
Department of Posts on behalf of Ministry of Finance. Department has
accordingly submitted an application to the Reserve Bank of India (RBI)
on 28.06.2013 seeking banking license subject to necessary cabinet
approval. RBI has said that new banks will have to set up at least three
branches in villages with a population of less than 10000, for each
branch they establish in other areas. Although Post Bank does not intend
to open a bank in every Post office, the plan is to meet the financial
inclusion goal through these Post offices. India Post had 1,54,822 Post
offices across the country as on 31.03.2013, the largest for any
department in the world, and close to 90% of them – 1,39,086 – are in
rural India. This is more than four times the number of rural branches
run by India’s Banks put together. According to plan prepared by Ernst
& Young, India Post will become Post Bank of India’s banking
correspondent. PBI will use Post office infrastructure but very
frugally. Carefully done PBI can be a game – changer in rural areas.
India post is among 26 applicants that sought banking licenses from
RBI. India Post has to develop the standards to meet RBI guidelines. In
its guidelines for new banking licenses announced on 22nd February 2013,
RBI required applicants to prove their eligibility on several fronts –
from promoter holding to past experience to business plans. The minimum
capital required by the applicants for license is Rs. 500 crores and
foreign share holding in the new banks is capped at 49% for the first
five years. The new banks have to be set up under a non-operative
Financial Holding company (NOFHC). They also have to maintain minimum
capital adequacy ratio – the ratio of risk weighed assets, a measure of
financial strength of the bank – of 19 % for the first three years. New
banks also need to list their shares within three years of starting
operations.
The main argument put forward by those opposing the Post Bank is that
Postal department has no experience when it comes to giving credit
(loans). Department has only been taking deposits till now. Sanctioning
and disbursing of credit needs an entirely different aptitude. India
Post has no specialized experience in the business. It is reported that
unlike many believe, the Post Bank of India will be a completely new
entity with no legacies of a government department and very little to do
with its parent department, except using some of its network. It will
have an independent Board. Separate recruitment has been planned to have
specialised banking staff. Of course, the Post Bank will be a
subsidiary organisation of India Post, which need to be registered as a
public sector Bank and Government equity in this new entity could be
diluted. Whatever reforms and regulations Government implements in
Nationalised Banking sector will be fully applicable to Post Bank of
India also.
There are many talented and qualified Postal employees who want to
switch over to the Post bank and to work as employees under the Post
Bank. The reports that separate recruitment will be made for the Post
Bank has cast shadow upon their hope to work in the Post Bank. NFPE
demands that the existing Postal employees who want to switch over to
the Post Bank shall be given chance to exercise option and if need be a
trade test to assess their capability can also be conducted before
selection. Selected officials can be imparted with intensive training in
commercial banking business. In any case 100% open market direct
recruitment is an injustice to those talented Postal employees who may
not be able to apply for open recruitment due to age factor etc. we urge
upon the Postal Board and Finance Ministry to give due consideration to
this aspect, before the new Bank is rolled out.
