Department argues it already functions as a payment bank, and a separate licence will not make any difference to its day-to-day running
India Posts, the country's postal department with one of the largest networks in the world with 1.55 lakh branches, is pushing itself to be converted into a universal bank. Once converted as a bank, it wants to offer a bouquet of services by running savings and current accounts, apart from taking deposits and giving loans.
A senior India Post official said that they already function as a payment bank. A payment bank differs from a universal bank as it cannot give loans.
A high level committee headed by former cabinet secretary TSR Subramanian is looking into the matter, the official said.
Praditya Kumar Bisoi, chief postmaster general - Maharashtra circle, told reporters on Thursday, "We still want to be full-fledged bank. We are already a payment bank. We are a government body and the government will take a final call on the issue."
"There is a high level committee headed by Subramanian which is expected to give out its recommendation. Let's wait for the report to see whether we will be allowed to function as a full-fledged bank," said Bisoi.
Bisoi added that the department for many decades has been functioning as a payment bank mobilising the savings and already works like a payment bank. So the payment bank licence will not make any difference to the day-to-day running of the organisation.
"We are already doing the work like a payment bank and I don't know what is the difference between what we are doing now and what a payment bank," he said.
The comments come amid speculation that India Post may only be given a licence to operate as a payment bank.
In a separate event held in Mumbai, RBI governor Raghuram Rajan said on Thursday that the central bank would invite applications for new bank licenses by the month-end.
India Posts has about 1.55 lakh branches. Of this, 800 branches are in the core banking platform and the department plans to spend another Rs 5,000 crore to bring about 25,000 branches under the core banking platform. They run a full -fledged bank but don't give loans.
In April, RBI had issued an in-principle approval for IDFC Ltd and Bandhan Financial Services Pvt Ltd to set up commercial banks. A total of two dozen entities along with India Post were in the race for new banking licences. The list included Reliance Capital Ltd, Bajaj Finserv Ltd, Aditya Birla Nuvo Ltd, L&T Finance Holdings Ltd, LIC Housing Finance Ltd and Muthoot Finance Ltd.
The RBI governor had already indicated that India Post could be considered to start operations as a payment bank.
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