Proposal for functioning of post offices as banks: Govt reply in Rajya Sabha

Department of Posts raised a proposal for setting up the Post Bank of India and providing banking services with a network of 1.55 lakh post offices with special focus on rural areas and financial inclusion. Reserve Bank of India (RBI) has informed that all commercial banks have been constituted by the Government by various Acts of the Parliament. Hence, to set up the Post Bank of India (PBI) by an Act of Parliament, necessary legislation will need to be framed and passed by the Parliament. Or to set up the Post Bank as banking company, the same would require a banking licence from RBI as per RBI’s extant guidelines issued in February, 2013. RBI is of the view that it is useful to take up a detailed Cost Benefit Analysis on the proposal. In addition, viability and strategic study, market research, business plan and profitability analysis including business projections for next 4-5 years needs to be carried out to assess the commercial viability of the proposal. 

GOVERNMENT OF INDIA

MINISTRY OF  FINANCE

RAJYA SABHA

(a) the reasons for not allowing Indian Post Office system to function as a banking system to mop up money lying idle with people while the declared policy of the Union Government is inclusive development and extension of banking operations to all rural people;

(b) whether post would be enrolled as one among the new banks with about 1,55,000 branches all over the country and with a good track record of successfully running Post Office Savings Bank for many years; and

(c) whether it is possible to substantially improve the quality of service of post offices in the process if so, the details thereof?