The Union Cabinet has cleared the proposal of granting the payment bank status to the post office. This historic decision was taken by the cabinet committee on economic affairs chaired by Prime Minister Narendra Modi.
This bank of the postal department, to be known as the ‘India Post Payment Bank’ will, apart from making available financial plans, provide certain banking services through more than 1.5 lakh post offices spread across the country. Prime Minister Modi is keen that banking services reach the most remote of regions of India. This decision is expected to prove significant from the point of view of economic inclusion. Government sources confirm that the ‘India Post Payment Bank’ will be launched across the country by 2017.
Moreover, this decision will spur on the postal department that at present, runs in a condition way below satisfactory. Last year in August, the Reserve Bank of India gave its approval to the postal department to run Payment Banks.
Though the Payment Bank will not authorized to offer lending services, it will deal in many banking and financial services. It will in any case, offer remittance services along with the facility of money transfer, of depositing money in the account and of bill payment. The Payment Bank will also make it possible to send money to one’s family living in the village. It will provide the internet banking facility and is authorized to issue the debit card but not the credit card. Also, it will be possible to remit various government subsidies and financial aid directly to the beneficiaries’ accounts in the Payment Bank.
Insurance plans, mutual funds and other banking products will be sold through the Payment Bank, for which purpose, the postal department may enter into agreements with certain companies. A few financial institutions have already come forward to invest in this Payment Bank. Of the total project corpus of 800 crores, 400 crores will be come from government grant and the other 400 from equity. The Postal department also plans to set up 5000 ATM points.
It is a known fact that even today, the rural public values its relation with the postal department. The Department of Post has a network of 1.54 lakh branches across the country and more than 25,000 divisional post offices. The decision is considered to be very significant in that it will easily connect the common man with banking and other financial services.
Prime Minister Narendra Modi has all along underlined the need for economic inclusion and it was for this reason that he initiated the ‘Pradhan Mantri Jan Dhan Yojana’ which intends to facilitate easy access of the rural public to banking services. The Payment Bank status now granted to India Post will, in keeping with the government’s policy, prove a significant step towards enhancing economic inclusion.