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.
