India Post suited to be payment bank: Financial Services Secretary GS Sandhu

MUMBAI: Lack of credit disbursing experience makes the postal department with its vast network of offices around the country better suited to be run as a payment bank and not as a full-fledged universal bank, a top Finance Ministry official said here today.

"The Department of Posts may be considered as a payment bank and they are working towards that. The problem with post offices is that they handle only one-side of banking, that is, the deposit side; but they don't handle the credit side," Financial Services Secretary GS Sandhu said at an event here.

"So by making them (postal department) a payment bank, they will be able to work in that area they are best at. That may happen soon," Sandhu said.

The Department of Posts with its network of more than 1.35 lakh post offices across the country had made concerted attempts to enter the banking sector by applying for a universal licence.

While allotting licences in April this year, the Reserve Bank of India (RBI) left it to the government to decide the fate of the Department of Posts' application.

The Department of Posts has been collecting deposits, offering fixed as well as recurring deposits accounts to people for a long time now.