Tuesday, July 30, 2013

Will Pin Codes Bring Profits?


For A dak bank...

  • It has a large rural network of 1,39,040 village post offices
  • Has accepted deposits for decades—Rs 6.18 lakh crore in 2011
  • Has established the trust of people, thanks to government backing
  • South Africa and Japan have run successful post office banks
  • Modest rollout plans, claims it’ll hire the best professional managers

...And Against It

  • The post office has never managed the deposits it collects; FinMin does.
  • The existing employees will resent outsiders—potential culture clash
  • New construction etc needed to make post offices bank-ready
  • Rural postal network manned by 1 lakh underpaid non-regular staffers
  • Could face recovery issues, given the perception it’s an arm of government


Jawaharlal Saha is one of India’s 40,000 postmen. Every day, he cycles with a payload of letters through the Mandi House area, in the bustling centre of Delhi. “On some days, the mail weighs 40 kilos. I might cycle around for say, five hours, and make repeat visits for Speedpost deliveries,” Saha says. Like other postmen, he sorts some mail, hawks insurance, sells stamps and pit­ches for the PO’s savings bank—tasks, he says, city postmen rarely have time for.

Saha’s busy schedule is not exceptional. Over the past decade,  the postal service has delivered lesser and lesser mail. It delivered 1,400 crore postcards, letters, newspapers, parcels and packets in 2001. This dropped to 660 crore in 2011, as private couriers captured the field. Simultaneously, the post office’s workforce dipped 30 per cent, from over 6 lakh to under 5 lakh. Its losses are roughly Rs 6,000 crore.

“We have really worked on our proposal, and we are hoping to get in-principle cabinet clearance for it. But I can’t say when.”Kapil Sibal, Union Communications Minister

That’s why, about a fortnight ago, the department of posts delivered its biggest package ever­—a proposal to raise a bank, which is now under the Union cabinet’s consideration. Along with 25 corporate heavyweights, financial institutions and brokerage firms, the department of posts has thrown in its weight—and, many say, its fate. Backed by Union communications minister Kapil Sibal, this is part of the government’s three-pronged strategy: a government-run postal system to ‘regulate’ the sector; a public-private-partnership (PPP) model to develop its vacant land; and, crucially, the post office bank.

Six years ago, the department had suggested its transformation into a bank, but that wasn’t cleared by the Reserve Bank of India. At the time, India was not looking to approve new banks. This time around, there’s been a warm reception, with newspaper editorials giving the proposal a thumbs-up, citing its national reach and emotional connect with the people. But is that sufficient to make for a viable bank?

“The proposal is a very well-planned-out effort,” says Ashvin Parekh, partner and national leader, financial services, Ernst & Young. The global consulting firm was appointed by the postal department five years ago to suggest a revival plan. It suggested the setting up of a new company, the ‘Post Bank of India’. “Postal services are shrinking and finding it very difficult to fund their work, and face private sector competition. They have, however, achieved efficiency in small savings, which the proposal hopes to leverage,” he says.

“Postal services find it hard to fund their work. But they are efficient with small savings, and the proposal leverages this.”Ashvin Parekh, Partner, Ernst & Young

Here’s the logic: all but 176 of India’s 1,54,866 post offices already provided financial services in 2011, and they have a great deal of trust-winning emotional appeal. For its various savings bank and certificate schemes, the postal department had a balance of Rs 6.2 lakh-crore in 2011, up from Rs 5.6 lakh-crore in 2007. “The popularity of financial products such as PPF and postal savings does not seem to have waned,” says S. Madhavan, a Delhi-based consultant, until recently a senior partner with PwC.

So far, post offices take deposits and hand over receipts. End of story. The finance ministry uses this money to fund the deficit or other projects. If the Post Bank of India is approved, post offices will start handing out loans, not just postcards. “There is no negative for investors if the post office opens a bank. They will benefit from streamlining,” says Calcutta-based financial planner Brijesh Dalmia. As a bank, the post office will have to follow KYC norms and conduct due diligence even on rural sources of funds.

There are precedents: South Africa has a post office bank, Japan has one. “Are there global examples of postal services becoming banks successfully? Yes. Is the task easy? No. In between these lies the truth,” says Neeraj Agg­arwal, a partner with Boston Consulting Group. He says the department’s wide reach and the fact that it has historically accepted deposits are its assets.

“The banking plan is in line with the idea of privatising the postal deparment, an essential service, through the PPP model.”D. Raja, CPI MP

That said, it’s a long trek. “The rollout plans are, accordingly, modest,” says Parekh. Initially, no more than 50 to 200 post offices will become banks every year. So, for most Indians, the post office next door—there is one within 2.6 km of everyone—won’t transform overnight. Besides, only 24,100 post offices were computerised by 2011. “Core banking”, in which deposits show up on the ledgers instantly, is still a work in progress.

To be an effective asset manager, says N. Srinivasan, a Pune-based consultant who has worked with nabard and RBI, the post office will have to learn how to invest money, give loans to factories and village folk. It will also face an onerous task: collections. “Setting up a bank will prove a challenge. Today, people feel postal deposits are government deposits. Will this perception last when it becomes a bank? It’s to be seen,” he says.

The department will need Rs 500 crore to capitalise the bank, and as much more to hire staff­ (they propose bringing in a management team from the private sector), upgrade technology and train people. As 40 per cent of urban and 60 per cent of rural Indians are “unb­anked”, clients are expected to line up.

Given the enormous hold of the post, there are detractors, of course. CPI MP D. Raja says the banking plan basically ties in with the department’s effort to privatise this essential service. “The land and building development of postal department and all its services are being given a PPP push. In fact, this is an essential service and the government should see it in that light,” he says.

What could be equally troubling is that 89 per cent of the post offices’ mail delivery is handled by gramin dak sevaks, an agitated lot who are demanding pensions and salaries on par with postmen. Over 1 lakh post offices are “extra-departmental”—that is, the dak sevaks own the premises and get a pittance, if at all, as rent. S.S. Mahadevaiah, general secretary, All-India Postal Extra-Departmental Employees Union, says, “The department doesn’t have bank management experience, so it will hire outsiders. Recovery will be handed to us. If these E-D post offices become banks, the rent of Rs 100 (paid only to some) amounts to nothing.”

Like Saha, the dak sevaks regularly multi-task, collecting price-related inf­­o­rmation, managing NREGA acco­unts, hawking financial products and so on,  usually getting a small “incentive” payment. In this way, the postman himself has been reinvented. The Union ministry of statistics and programme implementation had roped in dak sevaks to collect commodity prices in 2010. “After initial glitches, the data flow has been smooth and useful for us,” says T.C.A. Anant, secretary in the ministry and India’s chief statistician.

Post office employees hope they will be part of the big new banking plans. So far, there are murmurs of training and rollout of handheld devices. Clearly, the bank won’t replace the post office just yet. But change is in the mail.


News appeared in THE HINDU on India Post Banking Service 28.07.13

The Department of Posts, on Thursday, submitted an application before the Reserve Bank of India (RBI) for a licence to offer full-fledged banking services.
“We have approached the RBI today [Thursday], and hopefully having met all the conditions of RBI, an in-principle approval might be given. If it is given, I think, it will be a revolutionary step because it will bring banking, subject to Cabinet approval, to the doorstep of the ordinary man in this country,” Telecom and IT Minister Kapil Sibal told PTI.
The RBI is in the process of granting fresh banking licences and has set July 1 as the deadline for applying.
The Department of Posts has plans to start 50 bank branches in the first year and scale it to a total of 150 branched in five years.

The Department of Posts has started inter-ministerial consultations for seeking Cabinet approval on around Rs.1,900 crore fund requirement to start Post Banks. The total amount includes Rs.500 crore paid-up capital required under new banking licence guidelines. — PTI

Details/Pattern of Postal/Sorting Assistant (PA/SA) Phase-II Exam 2013 (Computer/Typing Test)

Now as Postal Department started publishing the List of Shortlisted Candidates for Paper-II based on the performance in Paper-I(Aptitude Test), its time now to understand the details of Paper-II (Computer Typing/Data Entry Test) & Practice it.

Results of Andhra Pradesh, Gujarat, Karnataka, Maharashtra, Tamil Nadu, Assam, Chhattisgarh, Jharkhand, Madhya Pradesh, North East, Odisha, West Bengal and Kerala Postal Circles already stands published in the official website.

Results of Delhi, Jammu & Kashmir, Punjab, Uttar Pradesh, Uttrakhand, Bihar, Haryana, Himanchal Pradesh and Rajasthan Circles are expected soon.

Here is the list of number of candidates shortlisted from each Circle based on the results declared so far.

Name of Circle
No. of Shortlisted Candidates for Paper-II
Andhra Pradesh
Tamil Nadu
Madhya Pradesh
North East
West Bengal

Pattern of Paper-II (Computer / Typing Test):
The Typing Test shall be for a duration of 30 minutes (15 minutes each for Typewriting and data entry) consisting of one passage of 450 words in English or 375 words in Hindi to be typed with a minimum speed of 30/25 words per minute respectively & Data entry of some figures and letters each carrying equal marks on Computers.

The typing test and test of data entry operations will be conducted on Computer key board but not on type writer.

Note: The final merit shall be prepared on the basis of the aggregate marks obtained by the Applicants in the Aptitude Test (Paper I) only subject to their qualifying in Computer/Typing test ( Paper II). ie, there will be no marks for Typing/Data entry test. You have to just qualify the minimum criteria in Paper-2 and final merit list shall be prepared on the basis of marks of Paper-I only.

Formation of seventh pay commission and merger of DA

According to our sources in New Delhi, there is no chance of any merger of Dearness Allowance with basic pay as demanded by the associations. But the Government is considering the formation of seventh pay commission.

The seventh CPC is scheduled to be effective from 1.1.2016 and if it is formed this year, there will be ample time to finalize it's recommendations. Moreover, if it is not effective from an earlier date, the Govt. will be free from any burden of paying arrears, which may adversely effect the fiscal situation. Most significantly, in the eve of general election, the Govt. may spread a "feel good" situation among the employees without having to pay an extra penny from the exchequer. In the other hand merging D.A. with basic pay will lead to a considerable expense and as there is definite negative recommendation of sixth CPC in this respect, Govt. can easily deny this demand. After formation of seventh CPC, if the ruling party fails to come back in the corridors of power, the entire liability will have to be borne by the new Govt. So, it's a win win situation of the ruling party and most likely, it will be announced in the later half of the year.

Source :



O f the 26 aspirants who want to set up a bank, the government arm, India Post, appears to be best placed to fulfil the objective of financial inclusion. The Reserve Bank of India has said new banks will have to set up at least three branches in villages with a population of less than 10,000 for each branch they establish in other areas.

Unlike what many believe, a Post Bank of India (PBI) will be a completely new entity with no legacies of a government department and very little to do with its parent, except using some of its network. It will have an independent board and just two members from the government, one from the finance ministry and another from the department of post.

Geographically, the India Post network beats the entire banking system in the country. The ubiquitous mail carrier is present in more than 1,55,000 locations in India, 90 percent of them in villages. On an average, a post office serves an area of a little over 21 sq km and a population of 7,175, much lower than the RBI norm. In terms of experience with collecting deposits, the crucial left hand side of a bank balance sheet, again the department is unmatched. It manages over Rs 6 lakh crore in savings deposits and offers several financial services such as pensions schemes, insurance, recurring deposits and remittances.

That said, one of the crucial areas in which the department is short in experience is credit; the bread and butter for a bank.

To be sure, the idea of a PBI has been around for nearly 15 years as leaps in modern communications technology gradually made the snail mail unattractive and obsolete. On July 14, India Post shut down its 162-year-old telegraph service.

About five to six years ago, the Administrative Staff College of India prepared a report on turning the post office into a bank. It was more wishful thinking than a concrete business plan. It had proposed turning all post offices into bank branches. “That would have required about Rs 62,000 crore in capital and Rs 2 lakh crore in priority sector lending,” says Ashvin Parekh, Partner and National Industry Leader, Global Financial Services, Ernst & Young. RBI norms require all new banks to comply with reserve requirements from start.

The RBI and the finance ministry had also raised concerns about the department’s credit capability. It was clear that turning the entire network into a bank was a non-starter.

According to the plan prepared by Ernst & Young, India Post will become PBI’s banking correspondent. PBI, which will start with just 40 branches, will use the post office infrastructure but very frugally. In the beginning, it is only looking at a small, Rs 5,000 crore bank. That also means the government will not have to shell out huge amounts of capital. Anyway, the bank will need to bring in new shareholders and sell equity to the public for a stock market listing, as per RBI norms.

The bank can also leverage the technology backbone that is being put in place. The department has a Rs 4500 crore allocation in the 12th Plan for technology upgradation. Of that budget, Rs 1,200 crore will go only into financial services, including a core banking software, Infosys’ Finacle.

Carefully done, the PBI can be a game-changer in rural areas. It has a great brand recall and in many villages of India, the postman is a popular person. In fact, it can go one step ahead and even play a role in financial literacy in villages.


PAN explained.......

PAN is a 10 digit alpha numeric number, where the first 5 characters are letters, the next 4 numbers and the last one a letter again.

These 10 characters can be divided in five parts as can be seen below.

The meaning of each number has been explained further.

1. First three characters are alphabetic series running from AAA to ZZZ

2. Fourth character of PAN represents the status of the PAN holder.
• C — Company
• P — Person
• H — HUF(Hindu Undivided Family)
• F — Firm
• A — Association of Persons (AOP)
• T — AOP (Trust)
• B — Body of Individuals (BOI)
• L — Local Authority
• J — Artificial Juridical Person
• G — Government

3. Fifth character represents first character of the PAN holder’s last name/surname.

4. Next four characters are sequential number running from 0001 to 9999.

5. Last character in the PAN is an alphabetic check digit.

Nowadays, the DOI (Date of Issue) of PAN card is mentioned at the right (vertical) hand side of the photo on the PAN card. .........!
For Latest Updates .... Always Visit -

Little-known tax deductions you might have missed while filing returns

Paying more tax than is due is bad enough. It's worse if you don't even know you have overpaid and are eligible for a refund. Many youngsters are not conversant with tax rules and fail to fully utilise the deductions available to them.


Tax filing portal studied last year's returns and found that nearly 51 per cent of salaried taxpayers had not fully used the tax-saving limit under Section 80C. Only one of the four taxpayers had claimed the full deduction for health insurance under Section 80D.


Here are some little-known deductions available to taxpayers. Make sure you claim them when you file your returns this year. If you have already done so, you can file a revised one to claim the deduction you missed.


1. Home loan repayment under Section 80C


If you are paying a hefty home loan EMI, chances are that you will find it difficult to put money in tax-saving options. Take heart. While the interest paid on the home loan is deductible under Section 24b, even the principal portion gets you tax benefits under Section 80C.


This is a godsend for taxpayers, who have not been able to exhaust their Rs 1 lakh saving limit under Section 80C because of the home loan EMI. The deduction for the interest paid on a home loan is capped at Rs 1.5 lakh only in case of a self-occupied house. If you have bought a second house for investment and have rented it out, the entire interest during a given year can be claimed as a deduction. This brings down the effective rate of borrowing for the buyer.


2. 30 per cent standard deduction of rental


If you let out your house, the rent is added to your income and taxed at the normal rate applicable to you. However, there is a 30 per cent standard deduction from this income. So, if you receive a rent of Rs 10,000 per month, the total rent for the year would be Rs 1.2 lakh. Of this, Rs 36,000 would be the standard deduction and you will have to pay tax only on Rs 84,000.


3. Carry forward and adjust capital losses


Certain short-term or long-term capital losses you made during the year can be adjusted against other gains. If you lost money in stocks, equity funds or gold last year, you can set off the loss against short-term capital gains or taxable long-term capital gains from the sale of property, gold or debt funds. If you are unable to adjust the entire loss, you can carry it forward for up to eight financial years.


Suppose you lost Rs 80,000 in stocks and gold funds in 2012-13 and managed to adjust Rs 30,000 against gains from debt funds. You can carry forward the unadjusted loss of Rs 50,000 and keep doing so against other gains till 2020-21. However, you can adjust only short-term losses from stocks and equity funds in this manner. If you have held the stocks and funds for more than one year, the losses cannot be adjusted.


Also, one cannot set off short-term gains from stocks against long-term capital losses from other assets. However, both short-term and long-term losses from other assets, such as gold, property and debt funds, can be adjusted. The taxpayers who earned capital gains from fixed maturity plans (FMPs) and debt funds will find this particularly useful.


4. Use indexation for long-term gains


Do you know you can use inflation to bring down your tax? The indexation benefit can be used to adjust the buying price of an asset to the inflation during the period of holding. If this sounds Greek to you, here's an example.


Suppose you invested Rs 2 lakh in an FMP, in March 2010, and got Rs 2.8 lakh when the plan matured in March 2013. You will have to pay 10 per cent tax on the Rs 80,000 earned as capital gain. However, if you take the indexation route, the 35 per cent inflation during the holding period will adjust your buying price upwards to Rs 2.7 lakh. Even though the gain of Rs 10,000 will be taxed at a higher rate of 20 per cent, the overall tax will be only Rs 2,000, compared with the Rs 8,000 payable, if you were to take the flat 10 per cent option.


Calculating the tax according to the indexation option requires a bit of math, but can be very rewarding.


5. Medical insurance of parents


The premium of your health insurance policy is deductible up to Rs 15,000 under Section 80D. However, you are eligible for an additional deduction of Rs 15,000 if you have insured your parents as well. If even one of them is a senior citizen, the limit of deduction is even higher at Rs 20,000.


6. Illness and disability


If you have a dependant, who suffers from any of the diseases specified under Section 80DDB, you can claim a deduction of Rs 40,000. The deduction is higher at Rs 60,000 if the patient is a senior citizen. The diseases include, neurological ones (dementia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus, aphasia and Parkinson's disease), malignant cancers, full-blown AIDS, chronic kidney failure and haematological disorders (haemophilia and thalassaemia). Dependants can include spouse, children, parents and siblings.


However, the patient should be wholly or mainly dependent on the taxpayer and should not have separately claimed any sum from an insurance company for the illness. Similarly, if a taxpayer suffers from a disability, he can claim deduction of Rs 75,000 under Section 80U. If he has a disabled dependant, he can claim the deduction under Section 80DD.


Disability includes blindness, low vision, leprosy, hearing impairment, loco-motor disability, mental retardation and mental illness. A minor disability won't get any tax benefits; the disability should be at least 40 per cent. If the disability is over 80 per cent, the deduction is Rs 1 lakh.

Source : The Economic Times

Friday, July 26, 2013

C. G. Employees and their dependents can avail treatment in a non empanelled Private hospitals in emergency conditions and get reimbursement

(G.I MH OM No. F. No. S. 14025/14/2012-MS, dated 11.06.2013)
Revision of rates for reimbursement of medical expenses incurred in emergency conditions under CS (MA) Rules, 1944
The undersigned is directed to state that the issue of revision of rates for reimbursement of medical expenses incurred on availing medical treatment in emergency conditions under CS (MA) Rules, 1944, when treatment is taken in a non-empanelled private hospital, has been under consideration of the Government for some time.
2. It has now been decided that, reimbursement of medical expenses incurred by a Central Government employee covered under CS(MA) Rules, 1944 on availing medical treatment for himself and his dependent family members in emergency conditions, would be allowed as per the prevailing non –NABH CGHS rates as applicable to a CGHS covered city and non-NABH rates applicable to the nearest CGHS covered city in case of non-CGHS city, as the case may be, or the actuals, whichever is less.
3. For the medical treatment in such cases where package rates are prescribed under CGHS, the non-NABH rates of the CGHS covered city and non-NABH rates of the nearest CGHS city (in case of non-CGHS covered city) or the actuals, whichever is less, will be applicable.
4. This OM supersedes all earlier orders issued from time to time under CS (MA) Rules, 1944 on this subject for allowing reimbursement of medical expenses in emergency conditions when treatment is taken in a non-empanelled private hospital.
5. This OM will come into effect from the date of issue.
6. This issue with the concurrence of the Integrated Finance Division vide their Dy. No. C-282, dated 22.05.2013.

Thursday, July 25, 2013

Article published in Kannadaprabha dated 22.07.2013 on POST BANK


       Income Tax Department issues press release to clarify that unlike previous year Salaried Employees with Total Income up to Rs.5 lakhs too have to file ITR (Income Tax Return) this year viz., Assessment year 2013-14.

       The full text of Press Release issued by CBDT (Cenral Board of Direct Tax) is as follows:


       The CBDT has, vide notification dated 1-05-2013, made E-filing of Return compulsory for Assessment Year 2013-14 for persons having total assessable income exceeding Five lakh rupees.

       The CBDT vide its earlier notifications had exempted salaried employees having total income up to Rs. 5 lakhs including income from other sources up to Rs. 10,000/- from the requirement of filing return of income for assessment year 2011-12 and 2012-13 respectively. The exemption was available only for the assessment year 2011-12 and 2012-13. The exemption was giving considering ‘paper filing of returns’ and their ‘processing through manual entry’ on system.

          However, this year the facility for online filing of returns has been made user-friendly with the advantage of pre-filled return forms. These E-filed forms also get electronically processed at the central processing centre in a speedy manner. Hence, the exemption provided during the last two years is not being extended for assessment year 2013-14. Taxpayers are encouraged to file their returns electronically. E-filing is an easy, fast and secure method of filing of income tax return. Moreover, Digital signature is not mandatory for these taxpayers and they can transmit the data in the return electronically by downloading ITRs, or by online filing and thereafter submit the verification of the return in From ITR-V acknowledgement after signature to Central Processing Centre.


        The processing for E-filed returns is faster. From 25th July to 31st July 2013 (Except 27th and 28th July being holidays), Special Return Receipt Counters are opened in IT Offices  (FOR SALARIED TAX PAYERS)