India Post has over 1.54lacs post offices across India, and in the first year it plans to launch 50 Bank Branches. As India Post has its Post Offices in prime locations across cities, its first 50 branches will be housed in the same premises as its Post Offices.
The government is likely to earmark Rs. 1,300 crore for the India Post to enable it to make foray into the banking space. “The expenditure finance commission will meet this month and finalise the fund to be provided to India Post for the proposed Post Bank of India,” a finance ministry official told PTI.
The Department of Post, which has applied to the Reserve Bank for a new bank licence, had last month approached the finance ministry for sanctions of Rs. 1,300 crore for its banking foray and to meet the capital requirements.
The India Post, which has over 1.54 lakh post offices across the country, would be using its existing network to provide banking services and bring in financial inclusion.
Of the 1.54 lakh, over 1.39 lakh branches are in rural areas and 15,736 are in urban regions.
There are around 90,000 bank branches in the country and provision of real-time banking services through postal network is estimated to triple the current banking network.
The Post Bank of India is proposed to be owned by DoP, but with a completely independent board, governance structure and operations. It will have representation from Finance Ministry, Ministry of Communication & IT, besides independent directors on its board.
The plan is to use post offices – which have a network of around 150,000 branches across the country, much more than all banks taken together – to expand rolling out of the DBT scheme.
An official said that once the proposal gets Cabinet nod, the banking correspondent model envisaged in the DBT scheme will be performed by postmen. Along with regular salary, postmen will get an additional commission of 0.07% for every new deposit.
The government also plans to link all post offices with core banking solutions ( CBS), which would further enable them to function as full-fledged banks. The plan is to allow post offices, which are allowed to take savings only, to disburse loans also.
The Centre was worried as many district magistrates and deputy commissioners cited poor last mile connectivity for the delay in rolling out the DBT scheme. Chief ministers, during their meeting with the Planning Commission to finalize state plans, also flagged the issue.
Infosys has two agreements with India Post to facilitate India Post’s Rural Systems Integration (RSI) program and Financial Services System Integration program, to receive AEPS credits.
Banks are not too enthusiastic of opening new accounts and seeding them with ‘Aadhaar’ numbers as under DBT, ‘no-frills’ accounts have to be opened, while they usually ask for a minimum deposit of Rs 1,000 for opening any new account.