The RBI governor, who is known for his candid comments, suggested
that the ‘Post Bank’ could be given a limited banking licence that
will be able to raise deposits and offer payment and remittance services.
At the annual day lecture of the Competition Commission of India on Tuesday
evening, the RBI governor, who is known for his candid comments, suggested that
the 'Post Bank' could be given a limited banking licence that will be able to
raise deposits and offer payment and remittance services. There will, however,
be restrictions on investments and the entire amount would be have to be parked
in government securities.
"...the proposed Post Bank could start as a payment bank, making use of
post office outlets to raise deposits and make payments," Rajan said.
The suggestion came in the wake of a statement that RBI, while being cautious
with new players, can be a little more flexible in allowing players to set up a
small bank or to operate in only one segment of banking business. "Such
differentiated licenses - licenses with restrictions on the geographical reach
or the products offered by a new bank - can generate more organizational
variety and efficiency. Small banks tend to be better at catering to local
needs, including needs of small and medium businesses," the governor said,
adding that consultations will be conducted with stakeholders on the issue.
The model could be a win-win solution for the RBI and India Post, and also
address the capital-related concerns that the finance ministry has. For RBI, a
payments bank model will help it tap into the post offices' extensive reach
that goes beyond what even State Bank of India
For India Post, it means that it can get additional revenue stream, learn the
tricks of the trade and then hope to convert into a full-fledged bank later. It
also comes with the advantage that lower capital may be required to sustain
this model.
