Union Budget 2013 -14: Post offices to be part of core banking
28 February 2013
Finance minister P Chidambaram on Thursday proposed to provide Rs532 crore to modernise the country's postal network as a result of which the post offices will become part of the core banking solution and offer real time banking services.
In his Budget speech the minister said soon the ubiquitous post office could also morph into a neighbourhood bank, proving a major boon for villages.
India Post, which has the largest number of offices across the country, has been planning to enter banking business as the guidelines issued by the Reserve Bank of India (RBI) makes all entities with a credible track record eligible for a banking licence (See: India Post plans to double up as bank) .
The department of posts has already appointed Ernst and Young as consultant for proposed 'Post Bank', official sources said.
India Post has a strong rural presence and is already into the small savings scheme. It has around 15.5 million local post offices and around 24,000 district offices against a total of 90,000 bank branches (all banks included).
The new guidelines for setting up private banks issued by the RBI, among other things, makes it mandatory for new banks to open at least 25 per cent of branches in unbanked rural centres.
India Post is already into various financial services, including small saving schemes, postal insurance, forex services, money remittance services etc.
However, since India Post is directly under a government department, sources say, cabinet approval may be required for starting the `Post Bank of India'.