A government-constituted task force to review the operations of India Post has suggested creation of a Postal Bank of India (PBI), which would work independently within the postal department with banking professionals.
The task force headed by former cabinet secretary TSR Subramanian has also suggested setting up of three subsidiaries as a part of a holding company under the postal department for extending services in the fields of banking, e-commerce and insurance.
The report was submitted to telecom minister Ravi Shankar Prasad on Thursday. The minister announced there would be no lay-off of India Post employees in the process of any restructuring.
The recommendations would be submitted to the government soon, according to Kavery Banerjee, secretary (Posts). The task force has also recommended to launch the proposed postal bank through an Act of the Parliament and not by approaching the Reserve Bank of India (RBI) which would make it easier for the govenrment to take a decision in this regard even if the RBI has objections to it, said sources.
The task force has recommended widening the ambit of work for India Post. It has said that India Post would not only run as a payment bank but also as a full-fledged commercial bank, which would help in financial inclusion with its 1.5 lakh postal offices across the country.
The panel set up in August this year has also made several other recommendations to leverage the vast network of India Post and its local knowledge across regions in the country.
The panel said “commercial banks have reached only to urban cities and towns but postal banks will cover interior villages which have largely been excluded from banking services. This would be a major boost to govenrment’s financial inclusion in real sense,” said Subramanian while releasing the report.
“With restructuring of India Post and establishing postal bank and involving e-commerce and other services, it would add 5 lakh more jobs,” claimed Subramanian.
Besides Subramanian, other members who form the panel include Ravindra H Dholakia of IIM, Ahmedabad, former Sebi chairman GN Bajpai and former Infosys board member TV Mohandas Pai amongst other top officials from the government.
India Post was amongst 25 contenders for a full service banking licence last year. However, it was excluded from the final list since the UPA government at the time was not keen on it citing its incapability to run a bank besides financial constraints. The Reserve Bank of India had last year issued licences to IDFC and Bandhan.
India Post has argued that the department’s entry to banking can contribute massively to the cause of financial inclusion, or the process of spreading banking services to the unbanked population of the country, using its vast network of 1,55,000 post offices.
India Post has around 1.4 lakh post offices in rural areas and handles savings deposits of Rs 6,00,000 crore and postal insurance of over 40,000 crore, which is just next to India’s largest bank, the state run State Bank of India. It has already started connecting all its branches through internet and ATMs across the country.