Late in the evening of July 1, a press release from the Reserve Bank of India created quite a to-do. In a rare display of transparency, the central bank disclosed the names of all 26 applicants who had queued up for a bank licence. While most of the names were expected, one unusual applicant stood out—the department of posts. Predictably, most newspaper columnists and commentators have commended this move. The acclaim and approval for the postal department’s future bank springs primarily from its one (and probably only) redeeming physical attribute—its enormous reach. According to India Post’s annual report for 2012-13, India has over 1.54 lakh post offices, of which close to 90 per cent are in rural areas. That makes it the world’s largest postal network.
This is a gigantic achievement. What’s more, given RBI’s unambiguous stipulation that new licences will be granted on the basis of the applicant’s plans for financial inclusion, a new bank for the postal department seems like a nap bet. Its rural network presents the best financial-inclusion platform among all applicants.