The Department of Posts (DoP) sought Rs 500 crore as initial capital for India Post from the government for launching banking operation in the country.
Reserve Bank of India (RBI) guidelines require that a new banking licencee has a paid-up capital of at least Rs 500 crore.India Post planned to start banking operations across 50 branches.
But Planning Commission opposes government funding for this project owing to the tight fiscal conditions. Though in principle, the commission does support the proposal, the current weak financial conditions are acting as a hindrance, reports quoted Planning Commission officials as saying.
Overall, the department needs about Rs 1,900 crore to run full-fledged banking operations. Financial help from the government is required, as India Post recorded a deficit of Rs 5,806 crore in 2011-12, 8.5 per cent lower than the Rs 7,899-crore deficit the previous year.
Further, some officials of the Planning Commission feel converting a part of post offices into full-fledged banks would hamper the core functioning of these entities. For the government, India Post’s banking operations would be beneficial in expanding the ambit of its ambitious Direct Benefits Transfer (DBT) programme.