In the article “Welcome to bank licensing Derby” (Business Line, July 12), it was stressed that the Department of Post looks to be a winner. It was reported that response for the new bank licensing exercise was quite lukewarm. Despite India being the world’s 10th largest economy, and its middle-class having large disposable incomes; 50 per cent of Indian adults still do not have bank accounts.
The banking sector is an ever growing industry which has never seen a decline in business and has usually maintained an increasing trend,, irrespective of the fact that certain key financial parameters like return on asset, non-performing assets ratio, profitability ratio, price-earning ratio, and so on, might have been on a downward trend.
There is a need to bridge the gap between people and financial institutions, and licensing is the first step towards achieving that.
The Department of Post and Department of Telecommunications appear to be qualified to meet the objectives of the RBI’s licensing policy.
To start with, if only one entity is to be picked to promote financial inclusion, the vote should go to India’s postal department. Its infrastructure, vast network which spans even the remotest places, reliability and popularity make it a strong candidate to undertake banking activities in the future. Such a scheme is the need of the hour to prevent more people from being entangled in chit funds and similar scams.
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