Postal bank on its way

New Delhi, June 7: Post offices are likely to turn into payment banks by late next month, reaching out to the unbanked section of the society under Prime Minister Narendra Modi's Jan Dhan programme. Top officials said they expected the RBI to grant a payment bank licence to India Post, which has a network of 1.54 lakh post offices. Two years back, the finance ministry had stalled the move to convert post offices into retail banks in spite of the RBI's backing. Formal banks in the country have around 85,000 branches that have been stretched to their limit to serve Jan Dhan clients. However, analysis reveals that large swathes of the country still remain uncovered or have beneficiaries who are unable to access banking owing to the distance. The government has, therefore, decided to use post office branches to reach out to the poor, turning the postal department into a retail bank. Fresh thinking and the imperative to turn the Jan Dhan programme into a success have altered the approach of the North Block. The postal department, which has been relegated into oblivion by private courier companies and the spread of the Internet, is suffering losses of over Rs 6,000 crore annually. However, post office savings schemes and money order windows remain popular. Rural post offices, which account for nearly 90 per cent of the network, cover large parts of the country where bank branches are absent. "As financial inclusion, which means bringing payment and lending windows to rural India where banks have been hesitant to penetrate, will remain an important objective for any government, the idea of Post Bank remains one which has to be looked at seriously," officials said. Brics member Brazil saw more than 10 million bank accounts being opened between 2002 and 2011 after its postal department established Banco Postal in partnership with a financial institution. Officials also point out that with increasing labour mobility, poor daily wage earners who travel thousands of kilometres in search of work need efficient, safe and cheaper ways of sending home money. Source :  http://www.telegraphindia.com/