India Post Gears Up for a New Hat
Post Bank of India to make financial inclusion a reality
With over 150,000 post-offices across the country and over 90% of them in the rural areas, India Post office holds the key to financial inclusion. Department of Posts’ physical and geographical reach is far greater than the cumulative reach of India’s biggest money churning banks. From small savings to micro-insurances to money transfer services, India Post has been providing numerous financial services. Recently its stepping into National Pension Scheme, has further widened its scope.
Moving a step closer to setting up Post Bank of India, India Post has started scouting for firms to prepare the feasibility plan for its metamorphosis to a banking structure.
The Department is already in the banking business in a sense. With outstanding balances of more than US$ 12000 crores in several savings schemes; the Indian Post can overshadow the savings account of many high-dotted banks of the country. And what’s more to feather the department than the fact that the majority of this balance hails from the rural India. With commercial banks still on the verge on indecisiveness about getting a toehold in the rural areas, this established infrastructure with over 250 million stakeholders is definitely a thing to bank on. The proposition will serve two major objectives – first it will infuse some energy in the postal department which is riding on loss making postal services and second the reach, it offers, can help reaching out to millions to whom banks don’t serve. Postal department can help paving way forward to financial inclusion.
The massive infrastructure, it has, can upstage any number of banks and business correspondence in the rural market. With less than 40 per cent of the rural households covered by institutional lending, the potential of the post office to address the crisis of credit in rural India can hardly be over emphasised. Postal bank can prove out to be an element to buttress the NREGA payment system. The policy of small savings and micro insurance presently adopted by the postal department can further plug into the self help groups. While banks have always been apprehensive of farm credits and loans to farmer groups, postal department with its extensive network can prove out to be a viable idea, owing to low operating costs and wider reach
It will be more like a kiosk in isolated rural heartlands, for finance, communication and technology. This magnanimous structure is today left to bleed. The postal department in its postal service segment is reeling under heavy losses and it is striving hard to be in sync with the changing times. Allowing transfer of remittances is one such step. The tying up of user-accounts for rural job schemes is another welcome start, which can be expanded to include cash transfer schemes that benefit the poor.
The picture is loud and clear – Postal department can easily ride on its reach. Not just banking services, it can be a hub for any e-services by the Government. India Post needs to encourage and seek partnerships with the private sector to ride piggyback on its network to promote its products. This way its deficit of US$ 140 crores might prove to be less of a burden.
The final analysis comes out that number of our humble dakiyas doubling up, wearing new hat of Mr. Banker that might prove out to be the best financial inclusion model.
Team NGOBOX
Coutesy: http://www.ngobox.org/
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