MUMBAI: RBI director Nachiket Mor has said that world over post offices have been successful as "payment banks". IndiaPost is an applicant for a banking licence and a panel headed by Mor on financial inclusion has recommended creation of specialized "payment banks" which can open accounts, cash cheques and remit funds without engaging in lending.
Speaking on the sidelines of ET Edge's Financial Inclusion Summit 2014, Mor said that world over there are many successful payment banks. "In South Korea, for example, the post office bank is a payment bank. How does this become viable? It becomes viable on transactions, it does not make money on deposits," said Mor. On IndiaPost's application seeking a bank licence from the RBI, Mor said: "I don't want to speak specifically about India Post itself, what I'm saying is worldwide post offices have been very effective as payments banks."
Mor headed an RBI constituted panel on comprehensive financial services for small businesses and low income household also known as the financial inclusion panel. The report has recommended granting licences to "payment banks" which generate revenue from fees on transactions. The panel has also recommended prepaid instruments for financial inclusion.
Mor said that considering the shortage of banking services in the country, providing banks a bit of a nudge on financial inclusion was justified. "The deeper problem that we have is we have a small banking system compared to the needs of the country. Expanding the banking system will take time. It is, therefore, legitimate for the system to give a nudge to banks. What we have said is that 'give the nudge but don't fix the pricing'," said Mor.
He said that in several segments where mainstream banks do not find it profitable to do business local area banks and cooperative banks are able to work quite well.
Speaking at the summit, Deepak Lamba, president, Times Conferences-BCCL, said: "With financial inclusion as the key focus area for the government, bank licenses are likely to increase rural penetration offering the unbanked population greater access to finance options with a host of banking as well as other products offerings like insurance, mutual-funds, gold loans; micro-credit, etc. In the coming months, the banking industry is likely to witness transformation in the business outlook for most industrial sectors, social upliftment opportunities not only for 'India' but 'Bharat' as well."
Source : http://timesofindia.indiatimes.com/