NIPOST News : Before Post Bank debuts

Nigeria Postal Service (NIPOST) will soon introduce a Post Bank to bring banking services to rural dwellers, according to Minister of Communications Mr Adebayo Shittu. Speaking recently in Ibadan, Shittu said NIPOST’s intervention would enable rural dwellers to have access to banking services and transact business with people all over the country. Furthermore, they will be able to receive or transfer limited funds to relations all over the world. 

The main advantage that the Post Office will have over normal banks is its wide distribution network and deep penetration of semi urban and rural areas. In many countries post offices are used to pay bills, buy and call credit. With the phenomenal expansion in mobile phone service and the use of text messages, internet and e-mail in recent decades, sending letters has dropped drastically and most post offices have little to do. Offering financial services is a creative new way to channel their energies. This is more so when the lucrative market for delivering parcels has been taken over by private courier companies. 

 

In some countries like Japan the post office has evolved into offering full banking services with the largest branch network in the country. Postal banking, which means that post offices run savings accounts, cash cheques and perform other basic financial services, is common in most parts of Asia and Europe. A quarter of the world’s national postal systems now offer some sort of banking services. A World Bank survey last year found out that postal banks are more likely to provide accounts to those outside the financial mainstream. The truth is that major banks find it hard to make money from serving poor customers since such people tend to have little money on deposit that the banks can lend out.

 Postal banking is also affordable because of the economies of scale and the existing postal infrastructure. In addition, in the absence of shareholders they are not driven by profit and provide services at cost price. The truth is that since big banks do not want low income customers, poor people go to money lenders who charge ridiculously high interest rates. Economic experts agree that the post office’s ability to provide small, brief loans at low interest rates could save poor people hundreds of millions in bank charges and fees.  

The initiative is laudable for many reasons. Firstly because, as in India, the post office here should become one of the largest employers of labour and the initiative is bound to create much needed employment. Secondly, the failure of most Micro-Finance Banks (MFB) and the quite evident disregard that the major banks have for small depositors needs to be addressed expeditiously.  The major banks do not want customers to walk into banking halls if their transaction is less than N50,000! 

However caution must be exercised. Just like most good initiatives the plan must be thought through before being put into action. Many important questions remain unanswered. For example, will the post bank be underwritten by other banks or will it be given the capital base to operate independently? What constitutes the minimum population for qualification as a village that requires a post office? If monies are now to be kept in village locations, how will security be provided? How will the majority of illiterate villagers be expected to access their money? Will there be sufficient internet connection and interconnectivity to ensure that accounts can be operated from any post office nationwide? Will operators of such accounts have access to Automatic Teller Machine (ATM) cards which they can use at any bank? Does the post office have the required personnel with financial expertise to carry out banking operations? 

Being a federal establishment will the post office employ local indigenes or will it involve in routine re-posting of workers in order to discourage fraud as is done in banks?  These issues must be clarified and communicated to the general public in order for the general public to buy into what is definitely a good initiative.

Source :  http://www.dailytrust.com.ng/