New
Delhi: Apex industry body ASSOCHAM has come out in support of the proposed
setting up of India Post as a rural banking structure to push financial
inclusion in the country’s hinterland, claiming several benefits to the economy
in this move, including raising domestic savings and investment levels.
Terming this bank proposal as a potential “game changer as a
conduit not only for financial inclusion but to induce socio-economic change”,
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) listed
several benefits like low cost of operation and “as one great opportunity to
achieve higher growth rates of household and domestic savings and investment.”
ASSOCHAM has submitted a detailed study on the proposed
India Post Bank making several suggestions for its effective functioning in a
shift to core banking operations from merely handling savings accounts. It
underlined India Post’s claim that its savings schemes already handling over Rs
6,05,697 crores annually with over 28 crore accounts in its various savings
schemes.
Among the suggestions of ASSOCHAM was linking of MGNREG and
other government payments in rural areas through this India Post Bank, handling
the five million SHG units, linkages with the proposed Women’s Bank with at
least one woman employee in each post office bank branch, use of PSU banks’
training facilities and bringing India Post bank under one or the other PSU
bank for operational oversight in each zone.
Pointing out that rapid urbanization and internal migrations
have raised annual remittances from urban to rural areas to a record Rs 70,000
crores and the rural jobs scheme MGNREG is pushing Rs 40,000 crores into
villages every year, ASSOCHAM said the India Post with its 1,39,086 rural post
offices , one for every cluster of five villages, and 2,63,467 Gramin Dak
Sevaks is best suited to tap into this flow and raise domestic savings. “This
is a huge resource at hand and touches almost every part of the country’s
interior” the chamber said.
It also noted other areas of rapid rise in rural incomes
like higher minimum support prices for various commodities both food grains and
commercial crops and National Livelihood Mission in rural areas. Business and
industry were now focusing on the emerging rural market as a new opportunity,
the chamber said quoting its own previous studies on rural markets and other
recent studies. Some five million new general stores have come up employing
over 8 million people in rural areas in the last five years according to its
study.
“Even just Rs 100 per household saved every month could
bring over Rs 12,000 crores from the 45 per cent of unbanked households in
rural areas” ASSOCHAM asserted listing what the postal structure could achieve
if properly utilized.
India Post was already handling a number of financial
schemes in villages like National Small Savings, Recurring Deposits, Public
Provident Fund, Postal Insurance, etc. In recent years as many as 4 crores of
MGNREG accounts were also handled through post offices for payment of wages,
forming over 40 per cent of the MGNREG funds for job entitlement scheme. The
chamber underlined the fact that in the financial aspect of India Post it was
handling a currently outstanding balance of Rs 6 trillion (lakh crores), an
enormous potential for savings and investment at the grass root level.
ASSOCHAM study also noted the changes occurring in India
Post with rapid adoption of information technology, commercial operations in
acting as sales agent for many items making it already“technology enabled,
self-reliant market leader” through its IT project 2012. The chamber said this
change has enabled it to venture into rural banking beyond merely acting as a
conduit for remittances from urban to rural areas (and also vice versa) and
running savings accounts.
The proposed India Post Bank should enter into core banking
operations. ASSOCHAM suggested the new structure for it be linked to a public
sector bank for a limited period to gain training and oversight on core banking
operations through the existing and additional employees. ASSOCHAM suggested
linkage with the proposed Women’s Bank with rural postal bank offices employing
at least one woman in each post office bank branch. The chamber also said that
low cost of operations that held the key to success in handling rural banking
especially among the bottom of the pyramid people was a major advantage for the
India Post in its new avtar as a bank.
ASSOCHAM has also suggested linking the Self-Help Groups
also to the proposed India Post Bank for disbursal of loans to promote small
and micro businesses.
The Central Government at present had to provide budgetary
support of Rs 6,000 crores annually to India Post to support its operations.
The chamber was hopeful that with the proposed extension into rural banking
operations, India Post would no longer require such support and Government
could save this annual outgo besides creating an infrastructure to draw
domestic savings from the rural areas where a major transformation was already
underway.
ASSOCHAM also released a companion study on “Rural
Employment” that revealed a significant shift in employment in villages away
from agriculture into new jobs especially in construction sector, growth of
several thousand “census towns” that provide new focus for industrial and
business activities serving and drawing from villages around and relentless
rise in rural wages especially backed by MGNREG jobs scheme and investments in
roads, houses and healthcare under the Bharat Nirman programme.
Source : http://www.orissadiary.com
