Expert committee recommended to create Post Bank of India through an Act of Parliament

The expert committee appointed by The Prime Minister Naredra Modi to study the feasibility of Postal Bank in India on August has submitted the report to The Communication Minister, Ravi Shankar Prasad on 04.12.2014.

The expert committee includes Kavery Banerjee - Secretary Department of Posts,  Rakesh Garg – Secretary Department of Telecom , RS Sharma - Secretary Department of Electronics and IT  , LC Goyal - Secretary rural development, former SEBI chairman GN Bajpai and former Infosys board member TV Mohandas Pai.

Following are the highlights of recommendations

1.       Launch the Post Bank of India through an Act of the Parliament and not by approaching the Reserve Bank of India which would make it easier for the Government to take a decision even if the RBI makes any objection.

2.       Set up holding company fully owned by the Department of Posts, with commercial subsidiaries for postal bank, e-commerce, insurance, delivery of various government services including Aadhar, ration cards and Kisan Vikas Patra, and distribution of third party products, such as bill collections and payments.

3.       PBI must be professionally managed and operated, with credit and other risks being handled by experienced experts hired from the market. In its own interest, operations must be fully in line and compliant with RBI guidelines

4.       An initial capital investment of Rs 500 crore for the postal bank, which can come from the government.   After three to five years, the government can then decide to raise additional capital via an initial share sale or involve private equity after assessing the success of this project.

5.       The postal bank will offer comprehensive financial services including regular banking credit, deposit and loans. To begin with, the PBI should give loans up to Rs 1 lakh and a second loan will be granted only after the first loan is paid back.

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