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.
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