...........The decision to foray into commercial banking now is only an extension of its presence in financial services through the post office savings bank which is used by millions across the country. Apart from offering savings schemes with attractive interest rates, post office savings bank accounts can be used normally like any other bank account. The name of the game in banking is an extensive branch network. And India Post is unbeatable in this with over 1.55 lakh post offices across the country, 90 per cent of them in rural areas. How many retail banks in the country can boast of such a network? The bank with the biggest network in India, SBI, has 14,816 branches; together with its associate banks the number will not exceed 20,000. Even if India Post were to convert just 10 per cent of its branches into banks, it will be larger than SBI.........
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1 comment:
India Post was toying with the idea of infusing professionalism and modern technology into its large banking business (let us accept the fact, though in a restricted way). No one can find fault with them for grabbing the present opportunity to express their wish. Some of the 26 applicants (there could be many who could not make it before the D-day) give a rough idea as to the kind of organisations which are serious about ‘converting’ the ‘money business’ they are already doing, into banking. At least in India, banks have more credibility and now there is a thinking that banking regulation will go into a ‘confusion state’ in the context of FSLRC which may allow certain applicants to have ‘best of both the worlds’. At the risk of repetition one is tempted to comment that opening of new banks should be an ongoing process based on need. Every organisation dealing with money need not be a bank. Organizational structure of banks in India needs a re-look in the context of various pending recommendations on financial sector reforms including those made by FSLRC. Bringing new players even before the rules of the game are settled may add to the confusion.
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