POST Bank of India : Coming Soon

Moving a step closer to setting up a banking business, the Department of Posts has started scouting for a consultancy firm to prepare a road map for the proposed 'Post Bank of India' (PBI).
The Department has already carried out a feasibility study for setting up the Post Bank of India and has invited expression on interest from consultancy firms--domestic or foreign-- to finalise the plans for the bank.
The DoP, according to an official document, "intends to obtain approval from the Cabinet and licence from RBI for creation of a full-fledged bank (PBI)".
The consultancy firm will provide inputs on issues like the organisational structure of PBI, requirement of seed money and its relationship with post offices.
The proposed PBI will provide banking services, including accepting of deposits from the public for the purpose of lending or investment.
The PBI will aim to "provide banking services with special focus on rural areas...ride on the Core Banking Solution which is proposed to be provided in all the post offices".
PBI will also become an additional source of revenue generation for the DoP, besides creating a platform for financial inclusion programme of the government.
Currently, DoP operates seven small savings schemes through a network of 1.54 lakh post offices and collects huge amounts for both state and central governments. It has over 250 million account holders.
In addition to deposit schemes, the PBI will provide loans to general public and corporates like any regular bank.
The DoP also runs a Post Office Savings Bank (POSB), the oldest and largest banking institution in the country.

There are 171 commercial banks in the country.

Of the their 93,080 bank branches, only 36.10 per cent are in rural areas and 24.76 per cent in semi-urban areas. The All India average population served per branch is 13,503.

On the other hand, out of 1.55 lakh post offices, 89.8 per cent (1.39 lakh) are in rural areas covering an average population of 5,992 per post office.

Banking on India Post

The Communications Minister, Mr Kapil Sibal, wants the Reserve Bank of India (RBI) to grant a banking license to India Post. The proposal makes eminent sense, especially at a time when financial inclusion has become a pervasive buzzword. With 1.55 lakh post offices in the country, of which 1.39 lakh are in rural areas, India Post's reach is bigger than the 75,000 branches (just 22,000 rural) of all scheduled commercial banks put together. Moreover, it is already in the business of banking in a sense: The various savings schemes operated by post office across India have outstanding balances of some Rs 600,000 crore. There is no reason for not extending this function to the next stage — channelising depositors' money for lending out to others and providing cheque facilities. The best example of why it is not an outlandish idea is provided by Japan's post office, which, as the largest holder of personal savings in the world, offers banking and life insurance services, apart from selling stamps and delivering letters. Allowing India Post to undertake regular banking functions would serve two objectives. First, it would make the institution more viable than it is at present on account of its being restricted to loss-making postal operations. Second, its unique outreach would equip it to serve social objectives.

India Post has a clear advantage over banks as a vehicle for promoting financial inclusion. The use of mobile banking and banking correspondents, for all their undeniable promise, can hardly bridge the gap in rural outreach. Besides, the usurious excesses of micro-finance have robbed it of some of its sheen. With less than 40 per cent of the rural households covered by institutional lending, the potential of the post office to address the crisis of credit in rural India can hardly be over emphasised. Its financial inclusion potential has already come to the fore in the context of implementation of the Mahatma Gandhi National Rural Employment Guarantee Scheme, where 46.7 million accounts had been opened and wages amounting to over Rs 18,000 crore had been distributed as on October 31 last year. It is also proving useful as the nodal agency for distribution of UIDAI cards.

While India Post runs up an annual loss of some Rs 7,000 crore, its long-term deposit bias would, however, give it a cost advantage in the lending business. It can make micro-loans and plug into the self-help group network. India Post is also serious about promoting electronic and phone banking solutions for its customers. If, apart from offering banking services, India Post were to encourage the private sector to ride piggyback on its network to promote its products, its deficit might prove to be less of a burden. In the final analysis, a postman doubling up as banker may well turn out to be the best inclusive banking solution of all.

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DOP has applied to the RBI for a banking licence

The Postal Department has applied to the Reserve Bank of India for a banking licence, the Communications Minister, Mr Kapil Sibal, said here on Wednesday.

Mr Sibal said he had written to the Finance Minister, Mr Pranab Mukherjee, to expedite the granting of licence.

Speaking on the sidelines of the postal policy round table organised by FICCI, Mr Sibal said, “A national postal policy targeting expansion and modernisation of the postal network would be announced during this year. The Government does not intend to issue licences to courier service companies, but would make it mandatory for them to register.”

Aimed at modernising postal services, the policy is expected to make the department adopt a more financially viable revenue model. It would also provide affordable services at all points in the country as part of its Universal Service Obligation, the Minister said.

The Department is also expecting large-scale private sector participation in providing value added services and extending its product range beyond the current core functions.

“There are tremendous opportunities for the private corporate sector to use its ingenuity to create innovative products and delivery mechanisms through the Indian postal network,” Mr Sibal said.

India currently has 1.55 lakh post offices, 95 per cent of which are located in rural areas.

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Postal dept works towards bank permit

The department of posts will formulate a detailed project report for setting up a bank, in the XII Plan.

“The postal department has already conducted a study and has found that the proposal is feasible. DPR (detailed project report) is the next step to chalk out the exact blueprint for the model,” a senior official from the department of posts (DoP) told Business Standard.

The department will apply for a banking licence from the Reserve Bank of India. Post Bank of India may be set up with the required authorised capital of Rs 700 crore, the official added.

“The plan is to offer banking services in rural and semi-urban areas by converting our post offices into banks. The department has about 1.5 lakh post offices across the country, which is mainly located in rural areas,” a source said.

The department also operates the Post Office Savings Bank, where it has over 240 million savings accounts. It has a customer base of over 23.75 crore with an outstanding balance of Rs 6,19,611 crore as on March 31, 2011.

The postal department offers schemes such as savings account, recurring deposit, time deposit, monthly income account scheme, postal life insurance, public provident fund, Kisan Vikas Patras and National Savings Certificates.

The feasibility report has already laid out ownership, capital and organisational structure, as well as new product and services to be offered, among others.

According to working group report for XII Plan, the demand for rural banking is particularly high with only 39 per cent of households covered by institutional banking. Globally, postal organisations have transformed financial services into banks successfully. The global firms include Deutsche Post Bank, Japan Post Bank, Kiwi Bank, La Banque Postale (France).

The department is also focusing aggressively on its postal life insurance product. According to the information with the postal department, the department has about 5 million policies under postal life insurance with an assured amount of Rs 58,132 crore, while under rural postal life insurance; it has about 13 million policies with an assured amount of Rs 67,162 crore.

The PLI has been clocking an average growth rate of 32 per cent in terms of premium income while the growth rate of RPLI stood at 60 per cent in terms of premium income in 2009-10 over the previous year.

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Post Bank : अगले छह माह में विस्‍तृत परियोजना रिपोर्ट बनेगी

Amendments to Indian Post Office Act soon

                             

LIST OF POST OFFICES FOR ATM INSTALLATION

                      It is proposed to introduce the segments of Core Banking Solution relevant to Post office Savings Bank Scheme (POSB) in 2207 departmental post offices initially.
                     The Government proposes to provide ATM facility in 810 Post offices. following POs are identified for ATM in M.P. Circle :

1	Balaghat
2	Betul
3	BHEL HO
4	Bhind
5	Bhopal GPO
6	Chhatarpur
7	Chhindwara
8	CT.T.Nagar HO
9	Damoh
10	Dewas
11	Dhar
12	Guna HO
13	Hoshangabad
14	Indore GPO
15	Indore Nagar
16	Jabalpur
17	Jhabua
18	Katni
19	Khandwa
20	Khargone
21	Lashkar
22	Mandla
23	Mandsaur
24	Morar
25	Morena
26	Nardsinghpur
27	Neemuch
28	Raisen
29	Rajgarh
30	Ratlam
31	Rewa
32	Sagar Cantt.
33	Satna
34	Sehore
35	Seoni
36	Shahdol
37	Shajapur
38	Shivpuri
39	Sidhi
40	Tikamgarh
41	Ujjain
42	Vidisha

Click to View : List of post offices for ATM installation

Source : pib

Conversion of POs into Banks- DOP is seeking License from RBI

The humble post office is all set to undergo a radical change with a proposal to convert over 1.5 lakh post offices across the nation into full fledged banks on the anvil.

Telecom Minister Kapil Sibal wants to reach out to the masses in the rural areas with modern banking facilities through the post offices.

"We want to commercialise the department. We will seek a licence from the RBI to convert all our post offices into banks," Sibal told PTI.

The lack of modern banking facilities in rural areas and dependence of villagers on informal sector for their credit requirements has prompted the government to work on financial inclusion by way of setting up 'postal banks'.

"The State Bank of India can't build branches all over India, but there are post offices across India. The branches are already there, so infrastructure expenditure is not required. So you can actually give banking facilities at relatively lower costs, which would be extremely beneficial to people," he said.

The post offices currently offer financial services like savings bank, postal life insurance, pension payments and money transfer services. Its total corpus stood at Rs 5,82,832.9 crore as on March 31, 2011.

DoP's revenues grew 11 per cent to Rs 6,954.09 crore in 2010-2011 from Rs 6,266.70 crore in the previous fiscal.

However, negative growth rate in some circles has pushed the Department's deficit to Rs 6,625 crore in FY'11, almost equal to the annual revenue of the Department.

"I want to make the (postal) system commercialised. By corporatising over 1.5 lakh post offices across the country, the ministry is expecting to improve the quality of services, increase profitability and reduce prices," Sibal said.

Out of the 22 DoP circles, some circles like Chhattisgarh have reported a negative growth of 19 per cent, Jharkhand 18 per cent and North East 15.9 per cent, whereas Assam (23.7 per cent), Haryana (19.5 per cent), Karnataka (13.5 per cent) and Tamil Nadu (13.9 per cent), recorded positive growth.

Among other steps, the Minister has asked members of Postal Services Board (PSB) to ensure 20 per cent revenue growth on sustainable basis.

Each member of the PSB has been asked to identify, commercialise and operationalise five major schemes of the Indian government, and partner with 5 PSUs and 10 corporate houses for commercial tie-ups with India Post with revenue potential of at least Rs 50 crore each.

DoP is also believed to be working towards setting up ATMs and offer debit cards for its customers.

"My vision is that post offices must become banks, so that an ordinary man can with Rs 10 open an account. We can set-up ATM machines for the e-banking...we can do e-retail," Sibal said.

According to officials, work for setting up 1,000 India Post ATMs is at an advanced stage and DoP has already held parleys with vendors on this front.

The Department is also working on providing skill development courses to its over 4.75 lakh employees with the Human Resources Development Ministry.

"The postman should also learn e-banking so that he can actually help the consumer on the ground. So, we are developing specialised skill development courses with the HRD Ministry," Sibal said.

source: Deccan Chronical