The Department of post is planning to offer banking services by starting a full-fledged bank, to be named Post Bank of India.
The communications and information technology ministry has started talks with the finance ministry on this.
Union Minister of State for Communications and Information Technology Shakeel Ahmed said there were 1,55,000 post offices in the country with a major presence in the rural areas. The financial services division of the department had 162 million account-holders. The total funds under the financial services was around Rs 37,50,000 crore, Ahmed said.
At present, the postal network offers a number of financial services but passes on the entire money collected to the finance ministry for a fixed commission. If the department hives off the financial services arm as a full-fledged banking unit, it will be able to keep the money collected and take investment decisions.
Ahmed said the ministries concerned were working on the functioning and regulation of the proposed entity.
â€œWe will have to sit with the finance ministry and the Reserve Bank of India to formulate the modalities of the operation of the proposed entity,â€ Ahmed said.
The DOP is also planning to form a separate company to administer postal life insurance and rural postal life insurance after it comes under the purview of the Insurance Regulatory Development Authority (Irda).
Harpreet Singh, director postal services, HQ and business development, West Bengal Circle, said, the corpus under postal life insurance would be around Rs 9,000 crore and that for rural postal life insurance would be around Rs 3,500 crore.
Currently, postal life insurance is extended only for government sector employees and rural postal life insurance for the rural sector.
The DOP has launched a number of financial services, including a money transfer facility through a tie-up with Western Union. Financial services have been contributing a major chunk of the departmentâ€™s revenues and are offering relief at a time when the postal department is reeling under losses, which stood at Rs 1,000 crore last year.
The DOP had taken up the issue of lower interest for post office products compared with banks with the finance ministry, Ahmed said.
As part of its plans to revive the DOP, Rs 6,000 crore would be invested as part of the Eleventh Five-Year Plan to upgrade and connect post offices with a centrally placed data centre, the minister said.
Ahmed was in the city for a tie-up between HDFC Bank and DOP (West Bengal Circle). HDFC Bank will offer loan against postal securities such as national savings certificate (NSC) and Kisan Vikas Patra in Bengal.
HDFC Bankâ€™s regional head (east) Madhusudan Hegde said the tie-up would strengthen HDFCâ€™s presence in rural regions.
In the eastern region HDFC Bank is targeting around Rs 7,000 crore as deposits and Rs 6,900 crore as advances in the current fiscal.