http://www.thehindubusinessline.com/industry-and-economy/banking/a-case-for-convertingindia-post-into-a-bank/article4449366.

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http://economictimes.indiatimes.com/news/news-byindustry/banking/finance/banking/government-likely-to-earmark-rs-1300-crore-for-post-bank-ofindia/articleshow/21593954.cms

http://prof-vaidyanathan.com/2006/07/13/leveraging-india-posts-strength/ The government is likely to earmark Rs 1,300 crore for the India Post to enable it to make foray into the banking space. The Department of Post, which has applied to the Reserve Bank for a new bank licence, had last month approached the finance ministry for sanctions of Rs 1,300 crore for its banking foray and to meet the capital requirements. The Department of Post (DoP) plans to launch banking operations from its 50 branches in the first year and scale it to a total of 150 branches in 5 years India Post, which has over 1.54 lakh post offices across the country, would be using its existing network to provide banking services and bring in financial inclusion.

Of the 1.54 lakh, over 1.39 lakh branches are in rural areas and 15,736 are in urban regions. There are around 90,000 bank branches in the country and provision of real-time banking services through postal network is estimated to triple the current banking network. The Post Bank of India is proposed to be owned by DoP, but with a completely independent board, governance structure and operations. It will have representation from Finance Ministry, Ministry of Communication & IT, besides independent directors on its board.

Finance ministry opposes India Posts banking licence plan Ministry says postal service doesnt have the expertise needed in handling credit or the ability to manage a bank First Published: Thu, May 09 2013. 11 21 PM IST India Post is keen to set up a commercial bank called the Post Bank of India, arguing that it can significantly boost financial inclusion in Asias third largest economy through its nationwide network of 155,000 post offices. This will also allow the organization, which posted a loss of Rs.6,346 crore in fiscal 2012, to make up for business dropping off over the years as letter writing dwindled and private courier firms took away market share. Losses have significantly increased in recent years on account of higher expenses. However, the finance ministrys department of financial services doubts India Posts ability to set up and run a bank, according to a senior postal department official who didnt want to be named. Some of the countrys large public sector banks have also been lobbying against the proposal, concerned that India Post, with its vast branch network, could pose a threat to their business, said the official, whos directly involved with the proposal. The larger idea of setting up a bank is to further the cause of financial inclusion. Entry of India Post into banking can significantly help address this situation, the official said. However, They (finance ministry officials) are asking too many questions. Why (do) you need a bank? What is your expertise to run a bank? the official said. India Post is engaged in several related functions, such as running a savings bank scheme, selling tax-saving instruments and accepting public provident fund deposits. The government also uses post office accounts to route payments to beneficiaries as part of the rural jobs programme and the direct transfer of subsidies. A former government official said the postal department should focus on its existing business.

It is totally illogical for the postal department to enter into banking. They do not have the experience in handling credit or the ability to manage a bank, said D.K. Mittal, who was finance secretary till recently. Mere experience in collecting deposits under the post office scheme is not enough. The department should ideally focus on improving their core activity. According to Mittal, the department should adopt new technology instead of diversifying operations. and try to become profitable