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Sunday, August 21, 2011

Your post office could soon don a bank’s role too :

Dept To Seek Cabinet Nod & RBI License
                New Delhi: Your friendly neighbourhood post office may soon be your bank as well, with the department of posts working on a plan to get a bank licence. It is expected to approach the Cabinet for approval of its proposal, and officials say once the plan is shown the green light, the department will formally seek a licence from the Reserve Bank of India. 
                    If the plan is approved and India Post gets to start its banking operations, it has the potential to emerge as one of the biggest banks in the country thanks to its massive network and reach. India Post, the largest postal network in the world, has a network of 1.55 lakh post offices out of which nearly 1.4 lakh are in rural areas. It already has 23.75 crore individual savings bank accounts and offers a whole range of financial services such as postal life insurance, pension payments and money transfer services. 
                    “It will fulfill the UPA’s agenda of financial inclusion if we are a full-fledged bank. We have a huge network and wide reach in rural areas,” Sachin Pilot, minister of state for communications and information technology, told TOI. 
                Globally, there are several successful examples of post banks. In France, its postal service, La Poste, started banking operations ‘La Banque Postale’ in 2006. In 2007, it had more than 11 million postal banking accounts and accounted for almost 25% of the postal service’s turnover. Similar     examples are visible in Italy and Germany. The banking operations of Post Italiane has helped it return to profit and expand its network. 
                Analysts say India Post needs to diversify its activities from the loss making postal services. Since post offices already accept deposits, it will be a good idea to enable them to branch out into full-fledged banking activities. However, they say, the best practices must be adopted to improve efficiency. 
                SPREAD SHEET 1.55 lakh Post offices nationwide, biggest postal network in the world. 1.4 lakh of these are in rural areas 23.7 crore No. of postal savings accounts. Post offices already offer insurance, pension and money transfer services 811 ATMs at post offices soon for postal & other customers ATMs for 1,000 cr part of India Post’s upgrade plan 

New Delhi: According to experts, improving efficiency is a must if India Post is to succeed in its proposed banking operations. “Post offices are losing heavily due to internet and other alternatives that have emerged. They already have some experience of banking and it will not be a bad idea to help them enlarge their activities. But the cadres need training to improve efficiency,” said D H Pai Panandikar, president of RPG Foundation, an economic think tank. 
    The department of posts has embarked on a drive to revamp its functions and modernize its network and is finding ways to generate revenues. Minister of state for communications and IT Sachin Pilot said as part of the image makeover, 811 ATMs would be procured at a cost of Rs 1,000 crore. “We plan to issue debit cards to our customers who can then access cash from these ATMs. We are also tying up with other banks so thatcustomers of different banks can use this facility,” Pilot said. The ATMs are expected to be rolled out by the end of March 2012. Core banking facilities are likely to be available in 4,000 branches once the networking of all post offices is complete. Pilot said the network of post offices is expected to be linked to enable roundthe-clock transaction facilities for customers. It will tie up with various government departments, ministries and state-run firms to maximize its revenues.

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