Finance ministry opposes India Post’s banking licence plan
Ministry says postal service doesn’t have the expertise needed in handling credit or the ability to manage a bank

Mumbai: The finance ministry has opposed India Post’s plan to seek a commercial banking licence from the Reserve Bank of India (RBI) on grounds that the postal service doesn’t have the expertise needed in relevant areas, such as handling credit.
Losses have significantly increased in recent years on account of higher expenses.
A former government official said the postal department should focus on its existing business.
“It is totally illogical for the postal department to enter into banking. They do not have the experience in handling credit or the ability to manage a bank," said D.K. Mittal, who was finance secretary till recently.
Emails to financial services secretary Rajiv Takru last week remained unanswered.
RBI invited applications from private and public sector entities in February to set up banks, three years after former finance minister Pranab Mukherjee made the suggestion and nine years after the last round of licences were issued.
Companies that have expressed interest in starting banks include L&T Finance Holdings Ltd, India Infoline Ltd, Religare Enterprises Ltd, Aditya Birla Financial Services Group, Mahindra and Mahindra Financial Services Ltd, LIC Housing Finance Ltd, Bandhan Financial Services Pvt. Ltd, Janalakshmi Financial Services Pvt. Ltd, Tata Capital Ltd, IDFC Ltd, Reliance Capital Ltd, India Infrastructure Finance Co. Ltd, Bajaj Finserv Ltd and Srei Infrastructure Finance Ltd.
Despite the finance ministry’s reservations, India Post is determined to go ahead with its application and has appointed consultancy firm Ernst and Young (E&Y) India to advise it on the plan, officials said.
The move gathered momentum when RBI announced final licensing norms for new banks in February.
E&Y will soon submit its final report to the postal department, said Ashvin Parekh, partner (financial services).
As of 31 March, the outstanding balance under the post office savings scheme stood at ₹ 6.05 trillion, which is equivalent to half the deposits of government-owned State Bank of India, the country’s largest commercial bank, and double that of the largest private lender, ICICI Bank Ltd.
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