Easy to open post office account than bank account

To open an account in a bank is tough a bank than to open an account in the post office. Moreover post office is within reach whereas at some places still the bank is still far off the reach of the common man. The bank norms know-your-account (KYC) are stricter than those for postal accounts.

Though postal savings have been hit by supersaver bank deposit schemes but it is easy to open account in it. For postal account a customer requires to provide only identity and permanent residence proofs. One can open an account with just Rs 50. Along with the cheque book facility, the minimum amount is Rs 500 to open a savings account. Retire persons opt for office saving accounts than in bank.

However RBI has simplified KYC norms for no-frill accounts but then also it is not easy to furnish details because of so many documents are required.

Even in a public sector bank branch one has to furnish a PAN card, income statement and proof of residence apart from other formalities under KYC norms. “Particularly in the rural areas, there have been complaints that branch managers stick to the letter of law and not the spirit, making it difficult for the financially-excluded to gain access to the system,” a banker admits.

Punjab National Bank (PNB) general manager (priority sector lending & lead bank division) S K Roy said, “The bank has been proactive in reaching out to the under banked population, taking banking to their doorstep. We are reaching out beyond our branch network through technology. We follow RBI’s simplified KYC norms to open no-frill accounts. PNB has over three lakh no-frill accounts. We also provide banking services through the use of biometric cards.”

In the 11th Five-Year Plan Dop brought up the idea of postal bank. According to the Dop the postal bank would be a subsidiary of the department with a banking license from RBI.

Moreover the number of bank branches in rural areas has been on the decline. The commercial bank branches in the rural area have declined from 35,134 in March 1991 to 30,572 in March 2006, according to the reports on financing of enterprises in the unorganized sector by National Commission. The report said it has also been reported that a large number of vacancies remain unfilled for long periods.

Invest India Market Solutions (IIMS) ED Sandeep Ghosh said, “Though the post office network is huge, it is present in the rural areas where most of the population doesn’t save. Those who save do so in bank accounts against postal accounts, higher returns being one of the reasons. According to the survey conducted earlier this year, of the 321 million working population, nearly one half doesn’t save since their annual income is less than Rs 50,000. It is not the lack of financial instruments or the lack of access as much it is about the capacity to save. Most initiatives in financial inclusion involve banks and not post offices, be it disbursal of state schemes or self-help group linkages.”

The survey conducted by IIMS Dataworks and Invest India Economic Foundation in 2006 is based on more than a million rural and urban households.