It seems that the Post Bank of
India (PBI) may become a reality in the near future. For the last more than
fifteen years we have been told about the Post Bank and even the Parliamentary
standing committee on Communications & IT has repeatedly demanded the
Government for commencing Post bank. Several attempts have been made, but the
Finance Ministry always took a negative stand, for one reason or the other.
Majority of the bank managements including nationalized banks have been
opposing the entry of the Postal department into commercial banking. The reason
is obvious. They foresee a potential threat to their existence once Post Bank
enters into their field and during the course of time the Post Bank may become
one of the biggest Bank.
Post Bank of India will be an
independent entity, separate from the current operations of small savings
schemes being carried out by the Department of Posts on behalf of Ministry of
Finance. Department has accordingly submitted an application to the Reserve
Bank of India (RBI) on 28.06.2013 seeking banking license subject to necessary
cabinet approval. RBI has said that new banks will have to set up at least
three branches in villages with a population of less than 10000, for each
branch they establish in other areas. Although Post Bank does not intend to
open a bank in every Post office, the plan is to meet the financial inclusion
goal through these Post offices. India Post had 1,54,822 Post offices across
the country as on 31.03.2013, the largest for any department in the world, and
close to 90% of them – 1,39,086 – are in rural India. This is more than four
times the number of rural branches run by India’s Banks put together. According
to plan prepared by Ernst & Young, India Post will become Post Bank of
India’s banking correspondent. PBI will use Post office infrastructure but very
frugally. Carefully done PBI can be a game – changer in rural areas.
India post is among 26 applicants
that sought banking licenses from RBI. India Post has to develop the standards
to meet RBI guidelines. In its guidelines for new banking licenses announced on
22nd February 2013, RBI required applicants to prove their
eligibility on several fronts – from promoter holding to past experience to
business plans. The minimum capital required by the applicants for license is
Rs. 500 crores and foreign share holding in the new banks is capped at 49% for
the first five years. The new banks have to be set up under a non-operative
Financial Holding company (NOFHC). They also have to maintain minimum capital
adequacy ratio – the ratio of risk weighed assets, a measure of financial
strength of the bank – of 19 % for the first three years. New banks also need
to list their shares within three years of starting operations.
The main argument put forward by
those opposing the Post Bank is that Postal department has no experience when
it comes to giving credit (loans). Department has only been taking deposits
till now. Sanctioning and disbursing of credit needs an entirely different
aptitude. India Post has no specialized experience in the business. It is reported
that unlike many believe, the Post Bank of India will be a completely new
entity with no legacies of a government department and very little to do with
its parent department, except using some of its network. It will have an
independent Board. Separate recruitment has been planned to have specialised
banking staff. Of course, the Post Bank will be a subsidiary organisation of
India Post, which need to be registered as a public sector Bank and Government
equity in this new entity could be diluted. Whatever reforms and regulations
Government implements in Nationalised Banking sector will be fully applicable
to Post Bank of India also.
There are many talented and
qualified Postal employees who want to switch over to the Post bank and to work
as employees under the Post Bank. The reports that separate recruitment will be
made for the Post Bank has cast shadow upon their hope to work in the Post
Bank. NFPE demands that the existing Postal employees who want to switch over
to the Post Bank shall be given chance to exercise option and if need be a
trade test to assess their capability can also be conducted before selection.
Selected officials can be imparted with intensive training in commercial
banking business. In any case 100% open market direct recruitment is an
injustice to those talented Postal employees who may not be able to apply for
open recruitment due to age factor etc. we urge upon the Postal Board and
Finance Ministry to give due consideration to this aspect, before the new Bank
is rolled out.
