India Post, in a dramatic bid to wipe out the
Rs 1,000 crore deficits that it currently runs, has started work to set up a
bank. Tentatively called the Post Bank of India, it's expected to start
operating with 30 branches at the end of this year, or next year on the
outside. During the course of the eleventh five year plan, the goal is to open
1,500 branches across the country.
In
many ways, the move mirrors a transformation that was engineered by the Italian
postal service. After years of mounting losses broke its back, Poste Italiana
started using its network to run everything from a bank to selling vacuum
cleaners. The gamble paid off and CEO Massimo Sarmi is now spoken of in revered
tones.
But
for India Post, the proposal is at a preliminary stage. "It will require
lots of permissions starting with the Postal Services Board, the RBI, the
finance ministry and the cabinet before operations begin," says Jyotsna
Diesh, chairman, Postal Services Board.
Sources
close to the development say the postal department is proposing a capital
investment of Rs 1,000 crore for the bank. It will be set up as a subsidiary
with the postal department holding a 51% stake in it.
It
also intends to rope inmajor public sector banks like the SBI to pick up a 25%
stake in the new venture. Of the remaining equity, 5% will be offered to
employees of India Post and the rest will be offered to the public. For the
department, the idea isn't entirely new. In fact, it has been toying with the
proposal for a while now as part of a series of initiatives to wipe out its
deficit, including postal finance marts to sell finance and insurance products.
As
for Poste Italiane, the company which ran up losses of $441 million in 1987 is
today estimated to be worth $13 billion and is readying itself for
privatisation. More than 15% of its revenues come from services that it didn't
think itself capable of delivering as recently as three years ago. Maybe, there
is a lesson in it for India Post.
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