India Post pushes plan to establish Post Bank of India

This despite government opposition.

India Post or the Department of Posts plans to request the Indian Cabinet next month for some US$305 million to establish its proposed commercial bank. The bank will be called the Post Bank of India.

Under the plan, Post Bank’s branches will be linked to India Post’s vast network of post offices and will promote goals of financial inclusion. Media reports quoted a senior government official as saying that India Post has decided to ask the Cabinet by October for capital for Post Bank.

India Post needs the government’s permission for the capital needed to set up the bank if it gets a license from the Reserve Bank of India, the central bank.

India’s department of financial services has raised serious reservations about the plan to establish Post Bank. The move to establish Post Bank comes as the government prepares to launch a new bank exclusively for women.

India Post estimates an immediate requirement of US$112 million and an additional US$192 million in the first five years of the bank’s operations.

India Post is one of 26 contenders for banking licenses. Analysts said it decided to rush the proposal to the cabinet because it needs to convince RBI that it has enough funds.