Will post office banks outlive co-op banks!

Will post office banks outlive co-op banks!

The announcement by Prime Minister Narendra Modi of co-locating payment banks along with post offices spread across India has generated animated debates among cooperators as the spread of the huge network of Post offices is sure to threaten the existence of cooperative banks and credit co-ops in the country.

Amul MD Mr R S Sodhi has been appointed to the Board of India Post Payments Bank as an Independent director. India Post has a strong presence of 1.55 lac post offices across the country and it will be a powerful vehicle for financial inclusion in the country.

India Post Payments Banks has started with a corpus of Rs 800 crore. People in rural areas will now be able to bank close to their homes as 1.39 lakh post offices are located in rural areas. The bank is likely to be a great financial tool and the final nail in the coffin of money-lenders’ culture still prevalent in rural areas.

People are wondering if this will inhibit the fledgling small UCBs and credit co-op.

D Krishna former Chief Executive of Nafcub and an expert on urban co-op banks says UCBs have to quickly embrace the cutting edge technologies and have to have a credible road-map to attract youth as customers on a much larger scale if they have to survive the competition.

Post Office Banks as payment banks do hold out much promise and are not a formidable challenge to the existing banks both commercial and Cooperative, Krishna underlined.

The Chief Executive Officer Dr Sukesh Zamwar of Buldana Urban the largest credit co-op in the country says ”in the short term there would be no challenge but as the idea of post payment banks gets going it would indeed be tough for us.

But it would unleash huge opportunities as well in the country and there may be enough for all, he added. I also think after five years or more down the line with post office banks beginning to have impact, the country’s economy may sail in unchartered waters, he underlined.

Meanwhile, credit structures need to spruce themselves up if they want to survive. Being small in size credit coops can take advantage by offering better services to their members, he said.

Dileep Sanghani, the Chairman of Nafscob says if post offices will be converted into payments banks, it will spur other banks to give better services and there would be no loss for the cooperative sector.

When implemented, Post offices will run under the RBI guidance and they will become capable of providing loans to rural areas. It will create a network of banks which will help in transferring benefits to the people, added Sanghani.