If given a banking license, the institution with a wide reach—Indian Post Office— could change the banking system and foster financial inclusion that no other institution will be able to match
An area where the Reserve Bank of India (RBI) has been under relentless pressure from the government for several years is on the licensing of new banks. Although RBI has been dragging its feet and insiders insist that the central bank is unlikely to clear any new bank before the general elections, it now has a list of 26 applicants ranging from the Indian Post & Telegraph Department to industrial conglomerates (Tata, Birla, Ambani, Bajaj and Videocon), micro financiers and a host of finance companies—many with dodgy antecedents.
A quick glance at the list would suggest that many of the finance companies would find it tough to pass the ‘fit and proper’ test. But think back to the 12 entities who got banking licences the last time and it becomes evident that, despite RBI’s posturing, many licences go to those who have the highest clout with the ruling government.