Department of posts must get banking licence, says Sibal
25 January 2014
Union communications and information technology Kapil Sibal said on Friday that he would continue to push for India's postal department to get a full banking licence, despite apparent opposition from the finance ministry.
"We have been trying very hard to persuade the finance ministry and we are yet to go some way to convert India Post into a postal bank. We have been fighting this battle and we are not going to give it up till we reach a logical conclusion," he told reporters after inaugurating the department's National Data Centre at Navi Mumbai.
Government planners have for some time been urging that post offices, which are spread through virtually every nook and cranny of the country, be allowed to function as 'mini-banks' to facilitate the spread of rural banking in areas where commercial banks are reluctant to open branches.
Asked about the finance ministry's opposition to the plan, Sibal was optimistic of reaching a favourable conclusion, saying his ministry would take the issue to the cabinet for a decision. But he did not say when he will do so.
The Reserve Bank of India is processing applications for banking licences from 25 entities, including the Department of Posts and top corporates like the Aditya Birla Group and the Anil Ambani Group.
The postal department contends that it can leverage its reach of over 1.55 lakh post offices across the country to spread banking. Of these, 1.4 lakh are in rural areas. "The only department that can do financial inclusion is the postal department," Sibal said.
He added that a host of services like insurance premium payments, wage distribution and most importantly, avenues of saving will be possible as if India Post is allowed to enter banking.
As of March 2013, postal savings stood at a whopping Rs6.05 trillion, which is half the deposits of the country's largest lender State Bank of India, and double that of the largest private lender, ICICI Bank.
"Within six months of the launch, you will be able to use other banks' ATM cards to withdraw from our ATMs and our account holders to go to other companies' ATMs."
Asked about the progress on its banking licence and if her department has heard anything on it from RBI, Gopinath replied in the negative. She, however, said there is no point in taking any outcome for granted.
The department, which has hired consultancy firm Ernst & Young to prepare its banking foray blueprint, will make a representation whenever required, Gopinath said.