Here is an article appeared in
Firstpost titled Why RBI’s decision on a Post Bank of India is a slap for
Finance Ministry
The RBI’s decision on Wednesday to
“consider” the application of Department of Posts for a banking license
“separately in consultation with the Government of India” is literally a slap
in the face for the finance ministry.
Out of the 25 applicants that were in the
fray for a new license, the RBI granted “in-principle” approval for two - IDFC
and Bandhan Financial Services - while setting aside the application of the
Department of Posts to be decided separately. If the finance ministry had given
permission earlier, the RBI could have issued a license to the Department for
“Post Bank of India” as well.
While prior clearance of their parent
company was necessary for the private players who had applied for a license,
for the postal department, it was the clearance of the government of India, or
more specifically, the finance ministry that was mandatory. Without such a
clearance, the RBI could have rejected the application, which it didn't do. Had
the government given its clearance, most probably the Post Bank too could have
commenced its operations along with the other two licensees.
The Department of Posts has been trying to
get the clearance of the finance ministry for some time now, but for some
strange reason, the finance ministry has been dragging its feet. According to
knowledgeable sources, the RBI was very keen and has even met with the
ministry, but nothing fructified. It was clearly a case of the government
defeating its own proclaimed aim of financial inclusion. There is no other
institution, not even the network of public sector banks, that could help
financial inclusion in a way that the the postal department is capable of.
If the Post Bank of India is
operationalised, all the 1.54 lakh post offices, out of which about 90 per cent
are in rural areas, by default will become a “bank”. These “banks” will be more
accessible to the common people, because they have been right there for decades
in their neighbourhood: there is a post office for every 7176 people in the
country and in rural areas, the coverage is even better - one for every 5682
people. In fact, when the UPA government was struggling to find a way to
transfer the wages for NREGA beneficiaries, it was this network that came to
its rescue. About 2.2 crore people get their NREGA payments through the post
offices.
Financial services are not new to post
offices because for several decades, they have been running the post office
savings scheme. Besides the extremely high penetration of the post offices, in
rural areas, there are about 2.69 lakh agents (Grameen Dak Sevaks) who come
home to help people with banking. Almost all these agents are also people from
the neighbourhood and are familiar with the beneficiaries.
It is a unique banking eco-system that only
Indian Post can claim credit for. It is a model that has evolved over time and
is very hard to replicate because it is driven by the sheer needs of people,
and nourished by trust and relationships.
This is where the finance ministry’s role
is suspect. Why hasn’t it granted the permission to the Department of Posts
when the RBI doesn’t have any objections. Who is it trying to protect? Isn’t it
its commitment to financial inclusion a sham?
Interestingly, Kapil Sibal, the minister
for posts, and even Rahul Gandhi couldn't get a government decision favouring
the Postal Bank. Sibal reportedly was very keen while Rahul Gandhi, as usual,
had his attention diverted.
As the RBI press release notes, financial
inclusion was the stated objective for giving additional banking licenses.
"In the budget speech of the Union
Finance Minister for the year 2010-11, it was announced, inter alia, that there
was a need to extend the geographic coverage of banks and improve access to
banking services and that RBI was considering giving some additional banking
licences to private sector players,” the central bank said.
Why was the most eligible candidate
excluded?
Anyway the RBI has a mind of its own and
has apparently not given into the government’s indifference. It has kept the
option of the Postal Bank open and will follow up with the financial ministry.
How long will the ministry block it? Will the next government take a favourable
decision?
The reasons are certainly more than what
meets the eye.
Courtesy:
http://www.firstpost.com/india/why-rbis-decision-on-a-post-bank-of-india-is-a-slap-for-finance-ministry-1464349.html
0 comments:
Post a Comment