When the then RBI Governor was speaking of expanding the banking network and was emphasizing the need for comprehensive Know Your Customer (KYC) requirements. A recommendation was made to the RBI Governor to consider converting the Post & Telegram (P&T) department in to a Bank – Post Bank.

The P&T department was facing strong competition from the Courier companies and needed to take advantage of its expertise in handling Postal savings, Money transfers and its incomparable reach across the country and its unmatched KYC capabilities.

This would also, add to the efforts for decentralization of Banking. Initially this did not receive much acceptance, but it has since been taken up and is an on-going process.