GOVERNMENT OF INDIA
MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGY
DEPARTMENT OF POSTS
RAJYA SABHA
UNSTARRED QUESTION NO.163 TO BE ANSWERED ON 24TH APRIL, 2015
POSTAL BANKS
163. DR. PRADEEP KUMAR BALMUCHU:
Will the Minister of COMMUNICATIONS AND INFORMATION TECHNOLOGY be pleased to state:
(a)
whether it is a fact that Government is urging the Department of Posts
to come up with opening of Postal Banks in the country, if so, the
details thereof;
(b)
whether the Subramanian Committee, to which the matter had been
referred, has submitted its report and has made recommendations in this
regard; and
(c) if so, the details thereof?
ANSWER
THE MINISTER OF COMMUNICATIONS AND INFORMATION TECHNOLOGY
(SHRI RAVI SHANKAR PRASAD)
(a)
Sir, the Department of Posts has submitted an application to Reserve
Bank of India on 30.1.2015 seeking license for setting up Post Bank of
India under the rubric of “Payments Bank”. The Government is committed
to increasing access of the people to the formal financial system and in
this context; Government proposes to utilize the vast Postal network
with nearly 1, 54,000 points of presence spread across the villages of
the country. The Government hopes that the Postal Department will make
its proposed Payments Bank venture successful so that it contributes
further to the Pradhan Mantri Jan Dhan Yojana. The details of the
proposed Post Bank would be finalized once the Reserve Bank of India
takes a favourable decision on application submitted by Department of
Posts. In the recent budget speech also the Finance Minister has
appreciatingly talked about Post Bank.
(b)
& (c ) The Task Force on Leveraging the Post Office Network
under the Chairmanship of retired Cabinet Secretary Shri.
T.S.R.Subramanian, has submitted its report during November-2014. The
said task force has recommended for setting up Post Bank of India. The
details of the recommendations are reproduced in the Annexure- ‘A’
enclosed herewith.
Annexure-A
Recommendations of Task Force on Leveraging Post Office Network with respect to Setting up of Post Bank of India:-
(i)
The proposal is not to convert the PO Network into a Bank, but to set
up a fully professional new Bank to further financial inclusion and meet
the objectives of the Pradhan Mantri Jan Dhan Yojna, which specifically
provides for the extension of credit to all Indians resident in every
part of India, particularly in rural areas.
(ii)
This opportunity for achieving universal financial inclusion via
technology and the institutional reach of the PO Network must not be
lost. There is admittedly a risk involved, as there is in any new
venture into uncharted waters. The risk involved can and must be managed
in the interests of the overall larger national objectives.
(iii)
The PBI must be professionally managed and operated, with credit
and other risks being handled by experienced experts hired from the
market. In its own interest, its operations must be fully in line and
compliant with RBI Guidelines.
(iv)
A new institution, to be called the Post Bank of India or by some
other suitable name, should be set up as a commercial bank offering the
full spectrum of financial and banking services.
(v)
As the owner of the proposed PBI, the Government of India may take
decisions as appropriate on structural and organizational issues and
other details, including the funding requirements.
(vi)
The Task Force is of the view that the PBI should be set up under an
Act of Parliament and that establishing the PBI as a statutory
institution and a Government Bank would enhance its credibility,
insulate it from local pulls and greatly facilitate its operations.
(vii)
It is essential to structure the proposed PBI in such a manner as to
pre-empt the possibility of outside interests influencing its day-to-day
operations.
(viii)
The Task Force also recommends that the PBI should initially be set up
as a Public Sector Bank wholly owned by the Government of India.
(ix)
The initial capital requirement, estimated at Rs. 500 crores as per RBI
requirements would be fully funded by the Government.
(x)
After the Bank establishes itself in 3 to 5 years, the Board of
Directors could take a view on floating an IPO to raise fresh capital.
(xi)
The PBI will focus on fulfilling the Government’s mandate of financial
inclusion and on bringing the un-banked and under-banked segments of the
population, particularly in rural, semi-rural and remote areas within
the ambit of the formal monetized economy.
(xii)
A view needs to be taken on how best to seamlessly integrate the
earlier banking operations into the proposed new structure, The best and
seamless method would be to fully absorb the POSB in the new proposed
Bank (PBI).
(xiii) The PBI will offer services including credit, which are beyond the remit of the POSB.
(xiv)
The PBI will develop financial products and services which are
specially tailored to the needs of the rural and urban unbanked
population, if necessary in collaboration with other banks.
(xv)
The PBI will function as a commercially viable and self-sustaining
entity without the need for continuing Government subsidies.
(xvi)
After the Initial gestation period, it should generate its own
resources and sustain itself in the competitive market environment.
(xvii)
The PBI should price its services on a cost plus basis and revise
these rates from time to time, so that its operations do not become a
continuing and increasing burden on the Government exchequer.
(xviii)
The PBI will start with a Head Office Main Branch and will thereafter
expand its operations by opening Branch offices in the Metro towns and
State capitals, to be manned by banking professionals.
(xix)
The longer term objectives would be to establish a Branch Office of
the PBI in each District Headquarter over a 3 to 5 year period, to be
operated mostly by banking professionals.
(xx) The 150,000-plus Departmental and Branch POs will act as Banking Correspondents for the PBI.
(xxi)
Careful consideration should be given to the various types, elements
and levels of risk involved in the PBI’s operations.
(xxii) Robust System Protocols and Standard Operating Procedures should be put in place to manage these risks effectively.
(xxiii) The PBI should recruit/commission the services of banking experts to manage its credit, portfolio and market risks.
(xxiv)
Appropriate management capabilities should be mobilized from the
market and robust systems and processes should be put in place to ensure
that Non-Performing Assets are kept within acceptable limits.
(xxv)
It is neither necessary nor desirable to mandate a waiting period
before the PBI enters into credit and lending operations.
(xxvi)
The PBI should be constituted and begin working as a credit and
lending Bank immediately, without any trial/waiting/learning period.
(xxvii)
The PBI should be set up as an independent Statutory and corporate
entity offering the full bouquet services, including credit, to its
customers.
(xxviii)
The PBI will primarily target currently unbanked and under-banked
customers in rural, semi-rural and remote areas, with a focus on
providing small and affordable loans and simple deposit products.
(xxix)
Customers will be provided with full-fledged Savings Accounts, which
can be retained even with zero balances, as provided for in the PMJDY.
(xxx)
Credit risks will be managed by hiring professionals from the banking
sector and by developing and implementing robust protocols for building
checks and balances in the system. Market and robust systems and
processes should be put in place to ensure that Non-Performing Assets
are kept within acceptable limits.