With the finalization of the RBI’s policy on starting new banks, the various private sector heavyweights lead by industrial firms like Reliance, are in the limelight to start new banks. But, the most suitable and desirable candidate is the public sector ‘network giant’- the India Post if one is searching the credentials of the candidates.
India Post’s advantage to start banking operations is visible on two grounds. Firstly, the entity is having the largest network in the country. It has a network of 1.55 lakh branches. Most importantly, it has 24000 district and taluk level offices which at present are handling many financial products including mutual funds and insurance products. Remember, the largest bank in India, the SBI, has only 16000 branches. Besides, the added advantage of the postal department as a financial services firm is that it can use its rural network to promote various financial products. Employees of the department can comfortably used as business correspondents to expand business without any additional strain.
The new regulation for starting banking business also instructs the beginners to start one out of the every four banks in the rural areas. This provision also gives undue advantage to the department of post.
Secondly, the main advantage of India Post’s as a banking sector beginner is its experience over the last few years in handling financial products. Already, services including mutual funds, foreign exchange services, money transfer and postal insurance are provided through the district offices and head post offices across the country. The postal insurance has emerged as the most attractive insurance product in India.
Simultaneously, the postal department has improved its physical infrastructure during the last couple of years. Project Arrow which aimed to improve facilities at main post offices has reshaped the department and has given a face lift.
Similar advantage is also there on the human resource front. The department has one of the youngest staff among central government departments. Of course, this young staff can be easily groomed to handle banking business.
Hence, the time has reached for the postal department to migrate to new areas as most of its traditional activities like postal services have became redundant services. Starting banking operations is a matter of survival for this past day titan. The new RBI regulation is a new opportunity which should not be missed. More than anything else, saving the postal department is a national priority. The government should not yield to the subversive pressure from other new banking aspirants like the Reliance in throwing away the interest of the department of post. The postal department is going through a historical crisis and the present one is a transition opportunity. It is now or never.