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The Right to a Bank Account

27/07/2012 Home page > Public Policy Initiatives > The Right to a Bank Account
Ran Melamed
The Knesset Economic Committee recently approved the implementation of express mail service throughout Israel. This is great news for the businesses and individuals who need to send same day delivery documents or packages without having to use the expensive services of private courier companies. The new competition might even induce courier services to lower their rates.
News about a Knesset Economic Committee resolution on Israel’s postal service raises a much more serious postal issue impacting a much larger segment of the population, an issue that has been brought before the Knesset Economic Committee several times and that needs be placed yet again on the public agenda. Given the current harsh economic reality for a majority of Israel’s citizens, the volatile social climate, and the need to close socioeconomic gaps, now is the time for the government to turn the postal bank and its 700 branches throughout the county into the first community social bank in Israel.
 

There are more than 200,000 needy adults who do not have access to bank accounts in Israel. Some prefer to use cash; others fear collection agencies and keep their money in their family’s or friends’ accounts. But the vast majority—tens of thousands—are citizens seeking credit to open small businesses, or business owners in need of available credit who are unable to qualify at ordinary commercial banks, especially during the economic downturn. In the new technological world, where the use of cash is fast disappearing and payment on credit is steadily increasing, a bank account and a credit card have turned into necessities and access to them should be considered a fundamental right.

 

Instead of addressing the problem, the Ministry of Finance has made several attempts over the past few years to promote the idea of privatizing the postal bank and turning it into another commercial bank. The implication of such a move is clear: it would give yet another tycoon the license to print money.

 

The Minister of Communications, Moshe Cahlon, understands the extraordinary potential of turning the postal bank into a social financial enterprise. Two years ago, Cahlon, in cooperation with YEDID and other professionals—among them the past Director of the Finance Ministry, Yarom Ariav, and the Deputy Attorney General, Didi Lachman Messer—formulated a proposal that would enable the postal bank to become a bank of the people. Today with the high cost of living increasing daily and pending social protests, it is essential to move on this proposal.

 

Transforming the postal bank into a social bank will enable tens of thousands of families and businesses to open savings accounts, receive the necessary credit to open or maintain businesses, and accumulate money for pensions. Precisely now, with warnings of worsening economic conditions in the background, the Israeli government must adopt Minister Cahlon’s community bank plan and fund the project within the framework of next year’s national budget. 

 

The post office is a social platform that in many countries functions as a security net for the disadvantaged by providing financial services at inexpensive rates, especially those services denied by commercial and government bodies. The postal bank is like a social financial center. In the United States, for example, the Community Credit Union Bank enables its clients to enjoy accessible and inexpensive credit within a framework of mutual guarantees and personal obligations by all parties involved, a model in which only a very few fail to repay their debts in time. This is exactly the way the social bank of the Nobel Prize Winner in Economics, Mohammed Yunis, operates.

 

With a postal bank offering a variety of financial services and also promoting the development of the field of microfinance, Israel will be able to create a rare opportunity—it will promote the best interests of society by enabling economic accessibility for all its citizens. Gradually it will be possible to use the postal bank’s infrastructure to develop financing and other business tools to establish more for-benefit social enterprises. The bank will become a social asset contributing to economic empowerment and enabling weaker populations to improve their economic situation. Privatization, on the other hand, will only serve to undermine these economic goals.

 

Numerous social community bank models providing services at lower profit margins to disadvantaged populations exist across the globe. It is time for Israel to acknowledge its responsibility to all its citizens, including its economically disadvantaged and financially underserved populations. Adopting existing models or creating one of its own, the government needs to be a central factor in establishing the first community social bank in the country.

 

It is imperative that we create tools now to help the weakest among us develop economically. As the fourth sector—for-benefit social enterprises—continues to grow, now may be the perfect time for NGOs to take the initiative and establish a non-profit corporation that will purchase the postal bank from the government and obtain a license to operate it from the Bank of Israel. The corporation can then operate the for-benefit postal bank, using the best models available, to empower the disadvantaged populations of Israel.