The Reserve Bank of India
(RBI), on Wednesday, decided to keep in abeyance its decision to grant
banking licence to the Department of Posts (DoP) for setting up the Post
Bank of India (PBI), thanks to sheer indecisiveness on the part of the
Congress-led United Progressive Alliance (UPA) government that has been
sitting on the issue for the past three months.
Armed
with all necessary approvals from various stakeholders, including the
Planning Commission and the Ministry of Finance, the DoP had submitted
its application with the Public Investment Board to be put before the
Cabinet Committee on Economic Affairs (CCEA) for its approval in January
this year. But the matter is yet to be taken up.
In the meantime, the RBI gave “in principle” approval for banking licences to IDFC and Bandhan Financial Services Private Limited, but it did not consider the PBI application as it did not had mandatory clearance from the government. “The HLAC (high level advisory committee
set up by the RBI to look into the issue) had also recommended that in
the case of Department of Posts which has applied for licence, it would
be desirable for the RBI to consider the application separately in
consultation with the Government of India,” the RBI statement said.
However,
this has given some relief to those engaged in the project in the DoP
and the government as their application was not turned down by the RBI.
And now they reason that the Cabinet can still decide on the issue
without losing any time. “The Election Commission of India gave the RBI
permission to decide on the licence grant as it was a routine matter.
Similarly, the Union Cabinet can also decide on the issue and let the
DoP get approval from the RBI...The issue of the model code of conduct
being in force is irrelevant here,” a senior government official said.
But
what puzzles many in the government is the reluctance on the part of
the Ministry of Finance to speed up the DoP application, particularly
when it would supplement the UPA government’s commitment towards
financial inclusion as the wide reach of the DoP would ensure that even
those living in remotest areas of the country get banking facilities.
“The
PBI would use over 1.3-lakh post offices as business correspondent for
the last mile reach in rural areas. These post offices will foster
government’s financial inclusion agenda by providing simple yet the
complete suite of financial products, including deposits, loans, insurance, remittances, pension products and government subsidies,” a senior official said.
Interestingly,
the PBI will run on a unique model where just 150 branches would be
opened over the next five years and manned by 3,000 employees, and these
would be linked to 800 head post
offices across India, which will further be connected to 25,000
sub-post offices and these to 1.3-lakh branch post-offices in remote and
rural areas, including places such as North-East and Naxal-hit areas.
In
its application to the RBI, the DoP has stated that the PBI would need
Rs.1,800 crore as total capital investment, of which the government’s
contribution would be just Rs.700 crore while the rest would be arranged
from domestic and foreign investors.
The PBI is expected to have a turnover of over Rs.21,000 crore in five years with a profit of Rs.300 crore.
Courtesy : The Hindu Dt 04.04.2014
April 05, 2014
Kalaivaraikalai
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