Concerned over the rise in interest rates on deposits by banks, the postal department is seriously considering to enter banking sector.
KOLKATA: Concerned over the rise in interest rates on deposits by banks, the postal department is seriously considering to enter banking sector by floating Post Bank of India.
Minister for Communication and IT Shakeel Ahmed said the postal department was in talks with the Reserve Bank of India (RBI) and Finance Ministry for setting up a full-fledged bank.
The minister said that following the rise in interest rates, there has been an outflow of deposits from small savings to banks in urban areas.
He, however, said the scene was different in rural areas where people still preferred to go for deposits in small savings due to its sheer reach.
The postal department has 1.55 lakh post offices across the country.
Ahmed said that the number of post office account holders were double the number of bank accounts of all the banks taken together.
He also said that the postal department was also in talks with the finance ministry for raising interest rates on small savings.
Ahmed said the finance ministry was not against raising interest rates on small savings and the matter was still under consideration
The postal department would invest around Rs 6,000 crore for technological upgradation of all post offices across the country. The money would be spent during the 11th Five-Year Plan period.
The postal department would also set up a national data centre during the plan period, he said.Ahmed said the loss incurred by the postal department was Rs 1,000 crore last financial year. This had come down from the previous fiscal.
The postal department was also in the process of making post offices as a hub for multitype activity. Meanwhile, HDFC Bank has entered into an arrangement with the postal department to help customers avail of loans from the bank against securities like National Savings Certificate and Kisan Vikas Patra.
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