Since Independence, every move of the RBI has been aimed at development
keeping in mind the welfare of the common man. In this connection,
granting a banking licence to India Post will be a unique service to
farmers, farm labourers and the rural poor, who feed the country but die
of hunger.
The huge number of farmers’ suicides should prompt us to enable faster
financial inclusion as only 35 per cent of the population holds bank
accounts. India Post is the best equipped to take this on, with over
1,53,000 post offices spread across the country, located not more than
2-3 km from each village.
India Post has ready infrastructure, which can be quickly upgraded to
meet the needs of a full-fledged bank branch in this age of solar power
and satellite telecommunication. On the other hand, it would probably
take decades for other applicants to open 1,53,000 branches.
Post offices already provide basic banking services such as savings and
fixed deposits (NSC) and products such as Kisan Vikas Patra and Public
Provident Fund which they will continue to do. They can spread the reach
of other savings instruments such as government bonds, and tap the
savings of the well-to-do in rural India for the development of the
country as well as crop and healthcare insurance.
Trust factor
The most important factor for a depositor is trust, which post offices
already enjoy, making them a safe investment destination. The only
additional thing they need to do is perform the credit function. This
can be undertaken by utilising the services of the credit staff of PSU
bankers from nearby areas, or by hiring retired bankers for the first
five years; by then they can train their own people.
As the postman is people-friendly, especially in rural areas, KYC
compliance will be not be an issue and chances of fraud and
misappropriation will be minimal.
The other issue to be addressed for enabling India Post to obtain a
licence is technical since it’s a department of the government. This can
be overcome by hiving it off with the required seed capital from the
government.
Highly do-able
Training the existing staff in lending and other banking operations can
be taken care of in 18 months. With lower infrastructure development
costs, post office banks will become profitable fast as establishment
and fixed assets costs will be less.
Post office banks will be a unique model of financial inclusion. Mahatma
Gandhi said: “India lives in her villages.” Yet this is a section we
have discriminated against with respect to every facility. This is a
chance to undo this injustice by making a new beginning.
Prosperity will reach every rural home when local skills, handicrafts
and rural products get credit for development. Such banks will help in
building infrastructure for storage and processing of perishable produce
locally. Developing traditional supplementary vocations (dairy,
poultry, fisheries, silkworm rearing) will help farmers put their spare
time to use instead of wasting it. This massive penetration of banking
services will help address the problem of farmers’ suicides. Enabling
India Post and granting it a banking licence will be a real service to
the nation.
(The author was chief manager, Bank of India, New Delhi.)
courtesy:http://www.thehindubusinessline.com
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