Its more than a post office

Finally, there is some word on our Indian Post and when its dream of becoming a quassi bank will become a reality. India Postpayments bank will start functioning from March 2017. This mammoth organization, with reach into the remotest corner of the country is the best unit suited for financial inclusion all through rural India.

What is a Payment Bank? This is a niche banking activity where the selected 11 are authorised to collect deposits (initially up to Rs 1 lakh per individual), offer Internet banking, facilitate money transfers and sell insurance and mutual funds. The objectives of setting up of payments banks is to ensure further financial inclusion by providing small savings accounts and payments/remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users.

Isn’t the Indian Post already doing most of these services? India Post is already doing many activities of a bank and giving it that stature will probably help it overcome its losses and will give a new meaning to micro financing.  As per a report in the Hindu, this decision to include India Post had already been proven in the context of implementation of the Mahatma Gandhi National Rural Employment Guarantee Scheme, where 46.7 million accounts had been opened and wages amounting to over Rs 18,000 crore had been distributed. It has also proved its utility as the nodal agency for distribution of UIDAI cards.

So that brings forth the thought – why can’t our Indian postal services be made more efficient and eventually an IPO?  While the Govt is divesting stake in other PSUs, why not in this huge organization, given its new stature and huge land bank? The Indian post, in terms of its reach is formidable - there are 1.55 lakh post offices in the country, of which 1.39 lakh are in rural areas. It has 75,000 branches which is more than all scheduled commercial banks put together. The various savings schemes operated by post office across India have outstanding balances of some Rs 600,000 crore. 

And IPO will have to be the way forward to modernize the post offices