The financial inclusion project of the Union government is set to chart new paths with post offices being prepared to carry out banking services. The Kerala circle of India Post is getting ready to execute the task envisaged by the Union Finance Ministry.
A programme to bring the post office network under core banking solutions is under way in the State, a top official of the department said. As many as 47 post offices across the State have been made ready to operate under the core banking solutions system. The project is slated for completion by the end of the calendar year.
Work on setting up 56 ATMs is in progress. The range of services offered by India Post at select centres includes postal life insurance, money remittance, mutual funds, and foreign exchange handling.
In his budget speech, Union Finance Minister Arun Jaitley had expressed hope of having the postal network included in the new payment bank system envisaged by the RBI. India Post has applied for the new bank licence. The payment banks will be able to handle payments and remittance, but are not permitted to issue credit cards or resort to lending activities.
The move to create Micro-Units Development and Refinance Agency (MUDRA), referred to in the budget, will help micro, small and medium enterprises (MSMEs) get adequate finance for their projects, K.P. Padmakumar, former chairman of Federal Bank, said. The Finance Minister’s budget proposal is a move for ‘funding the unfunded.’
Mr. Padmakumar told The Hindu that the contribution of MSMEs to the manufacturing segment was about 35-50 per cent, but the sector had been facing problems in getting finance from banks. Formation of MUDRA bank would have a multiplier effect. Small enterprises were often confronted with the question of viability from financing agencies. Banks usually insisted on collateral, which posed problems for units having a small capital base. A dedicated institution that could function as a refinance organisation would enable banks to set apart funds for MSMEs, he said.