Skip to main content

Plannning commissions concerns about setting up of Post Bank of India

Image
By


 

The panel opines Rs 500 crore needed as initial paid up capital for launching Post Banks might not be feasible at present. Hopes of the Department of Posts (DoP) to launch full-fledged banking operations seem to have hit a roadblock, with the Planning Commission opposing government funding to start the project.
The DoP has moved a Cabinet note for the government to provide Rs 500 crore as initial capital to India Post towards starting a bank. According to the Reserve Bank of India (RBI)’s norms for applying for a new banking licence, an entity needs paid-up capital of at least Rs 500 crore.

Officials said the commission felt providing the Rs 500 crore needed as initial paid-up capital for launching the bank might not be feasible, owing to the tight fiscal conditions. “Though in principle, the commission does support the proposal, the current weak financial conditions are acting as a hindrance,” said a senior official. 

ALSO READ: Opinion: RBI measures have converted banks into post offices

Overall, the department needs about Rs 1,900 crore to run full-fledged banking operations. Financial help from the government is required, as India Post recorded a deficit of Rs 5,806 crore in 2011-12, 8.5 per cent lower than the Rs 7,899-crore deficit the previous year. An official said India Post planned to start banking operations across 50 branches. However, a section within the Planning Commission felt converting a part of post offices into full-fledged banks would hamper the core functioning of these entities, another official said. For the government, India Post’s banking operations would be beneficial in expanding the ambit of its ambitious Direct Benefits Transfer (DBT) programme. This is because there are about 1,50,000 post offices across the country, much higher than the number of all public sector bank branches combined. The banking correspondent model, as envisaged in DBT, would be accounted for by postmen. For every new deposit, a postman would get an additional commission of 0.07 per cent.The official said moves were also afoot to link all post office branches with core banking solutions. To launch banking operations, India Post would have to restructure its shareholding, as according to RBI norms, promoter companies of entities seeking to set up banks should have at least 51 per cent public shareholding. Currently, India Post is wholly owned by the Union government.

Few years ago, India Post’s proposal to start banking operations was opposed by the finance ministry, as the DoP didn’t have expertise in areas such as handling credit.

 

ALSO READ: RBI gets tough with speculators to boost rupee

The DoP has a few savings instruments such as the post office savings scheme, as well as a life insurance scheme — Postal Life Insurance. It also acts as a distributor for mutual fund companies.

Comments

Post a Comment

Popular posts from this blog

Cabinet approves Implementation of the recommendations of 7th Central Pay Commission

By
  The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the implementation of the recommendations of 7 th  Central Pay Commission (CPC) on pay and pensionary benefits.   It will come into effect from 01.01.2016. In the past, the employees had to wait for 19 months for the implementation of the Commission’s recommendations at the time of 5 th  CPC, and for 32 months at the time of implementation of 6 th  CPC.  However, this time, 7 th  CPC recommendations are being implemented within 6 months from the due date. The Cabinet has also decided that arrears of pay and pensionary benefits will be paid during the current financial year (2016-17) itself, unlike in the past when parts of arrears were paid in the next financial year.  The recommendations will benefit over 1 crore employees. This includes over 47 lakh central government employees and 53 lakh pensioners, of which 14 lakh employees and 18 lakh pe...
Post a Comment
Read more>>

Model representation to be submitted to Head of the office for grant of One Increment

By
Model representation to be submitted to Head of the office for grant of One Increment Government servants are aware that the Ministry of Finance and Railways, both have already issued orders for grant of one increment in the pre-revised pay scale to nullify the anomaly in respect of central government employees who were in receipt of pre-revised increment between February 2006 to June 2006. A model representation requesting the concerned head of Office for grant of one increment and drawl of arrears is published below for ready use. MODEL REPRESENTATION FOR GRANT OF ONE INCREMENT From : To, Sir / Madam, ·   Sub: Officers who were due to get heir annual increment between February to June during 2006 – Grant of additional increment as one time measure- Request for sanction and drawal of arrears – Reg. Kind reference is invited to the Ministry of Finance, Department of Expenditure O.M.No.10/02/2011- E.III/A dated 19th March, 2012 wherein all the centra...
Post a Comment
Read more>>
By
ENHANCEMENT OF FINANCIAL POWERS OF HSG, HSG-II AND LSG POST MASTERS ( THESE ORDERS ARE IN FORCE. NO REVISION TAKES PLACE SINCE 21 YEARS) A reference is invited to Circular No.62-8/64-CI dated 20.10.1965 delegating financial powers to HSG and LSG Postmasters to incur expenditure of a contingent nature on the following items: a) Replacing, repairing, cleaning, oiling, shifting of electric lights and fittings, fans etc. of the office in a rented building when the charge is a Government liability. b) Repairs of Department bicycles. c) Purchase of earthen pots, glass tumblers, dusters, brooms etc. d) Purchase and repairs to furniture. e) Emergent arrangements for conveyance of mails. 2. The question of enhancement of the powers were being examined in the Directorate in view of the rise in the prices and it has been decided to enhance the powers given to HSG & LSG Postmasters from Rs.30 & Rs.20/- respectively on each occasion to Rs.60/- & Rs.40/- respectively on each o...
1 comment
Read more>>