In India, postal network has unbelievable reach and to take the benefit from this service, country’s largest lender SBI has joined hands with postal department.

State Bank of India (SBI) has tied up with postal department to take basic banking services to the doorsteps of millions of people in rural areas. Usually people living in remote and far-flung areas do not have any access to banking system. They have no option to save their money from the risk of theft or to get interest on their hard earned money and they preferably keep their money in home only.

In this mechanism postmen will act as banking correspondents for SBI and will be responsible for collecting deposits and offering small credit and remittance facility to people in far-flung areas. The project will cover more than 12000 villages of the country.

Moreover, SBI is expecting to cover around 12,492 villages by 2012. At present SBI have 5,000 branches in rural or semi-urban areas. A senior official said that joining hands with postal section will help them to achieve their target.

Reserve bank of India has mastered in designing this business correspondent model. Under this model, banking business agents will be assigned at places other than bank premises and these agents can be specific individuals and entities such as ‘kirana’ shop-owners, NGOs and post offices etc.

Finance minister had warned banks for choosing right persons and entities as banking agents as this model involved sufficient amount of risk.