Bank­ing by Post

The coun­try’s vast postal net­work of­fers many new pos­si­bil­i­ties.

Southasia - - CONTENTS -

In­dia’s Depart­ment of Posts, also known In­dia Post, is a gov­ern­men­t­op­er­ated postal sys­tem. It is gen­er­ally re­ferred to as "the post of­fice."

This post of­fice net­work dates back to the late eigh­teenth cen­tury. Lord Clive es­tab­lished first a postal ser­vice in In­dia in 1766 and it slowly de­vel­oped when War­ren Hast­ings es­tab­lished a Gen­eral Post Of­fice in Cal­cutta with a gen­eral post­mas­ter in 1774. In­dia was di­vided into pres­i­den­cies at the time. GPOs in Madras and Bom­bay started op­er­at­ing in 1786 and 1793. At present, In­dia has 1,55,015 post of­fices op­er­a­tional in the coun­try, 89.76% of which are in the ru­ral ar­eas. Em­ploy­ing a de­cent share of 2.18 lo­cals, the post of­fice net­work in In­dia has un­der­gone growth that has ex­panded by seven times since in­de­pen­dence in when there were merely 23,344 post of­fices in op­er­a­tion.

The strong In­dian post of­fice net­work is vi­tal be­cause of the part­time Ex­tra De­part­men­tal Post Of­fices that em­ploy lo­cals of the area. Th­ese em­ploy­ees work for five hours a day and de­liver mails on pay­ment of a cer­tain al­lowance. They must meet a pre-de­fined em­ploy­ment cri­te­rion as well. Four or­ga­ni­za­tional post of­fice struc­tures op­er­ate in In­dia – Head Post Of­fices, Sub Post Of­fices, Ex­tra De­part­men­tal Sub Post Of­fices and Ex­tra De­part­men­tal Branch Post Of­fices.

On an av­er­age, each post of­fice serves a pop­u­la­tion of 7,175 and cov­ers a ser­vice area of 21.21 square kilo­me­ters. Even though this is the world’s largest op­er­at­ing post of­fice

Sev­eral other projects to im­prove the postal sys­tem and its pro­cesses and ef­fi­cien­cies have also been ini­ti­ated.

sys­tem, it strug­gles to re­main ef­fi­cient in terms of core ser­vice de­liv­ery. The Post Of­fice Sav­ings Ac­count has de­picted an in­crease of 500% - the growth in­di­ca­tor be­ing the num­ber of de­posits. A new em­pha­sis on the bank­ing sys­tem in this post of­fice net­work can prove to be a fea­si­ble step to­wards sta­bi­liz­ing so­cio-eco­nomic devel­op­ment.

In this di­rec­tion, In­dia Post has now cre­ated a full-fledged postal bank - Post Bank of In­dia (PBI) - which will lever­age its mas­sive net­work of 1,55,000 post of­fices. Some 90% of the post of­fices op­er­ate in the ru­ral ar­eas. At present, bank­ing op­er­a­tions reach tier 1 and 2 cities that are most pen­e­trated in terms of ser­vice reach. A fair share finds its way into tier 3 towns too, but tier 4 ar­eas have re­mained de­prived of bank­ing al­to­gether. 40% of In­dia’s pop­u­la­tion does not get bank­ing ser­vices. With some 23,000 bank branches that are likely to be es­tab­lished in 2015 through the Post Bank of In­dia, hun­dreds of post of­fice branches will serve as a par­al­lel bank­ing sys­tem.

Post Of­fices get de­posits of 6 lakh crore each year which is sec­ond to the State Bank of In­dia. On gain­ing enough mo­men­tum, ATM ma­chines may be set up at 2800 dif­fer­ent lo­ca­tions around the coun­try. Post Bank of In­dia can start three bank­ing ser­vices in­stantly based on con­sumer bank­ing, in­sur­ance and e-com­merce. The fi­nance min­istry, how­ever, con­sid­ers the postal sys­tem not ad­e­quately equipped to han­dle com­mer­cial bank­ing and that ven­tur­ing into bank­ing would re­quire ex­tra ex­per­tise, par­tic­u­larly in han­dling credit. The bank­ing li­cense granted by the Re­serve Bank of In­dia only al­lows de­posit and pay­ment ser­vices to PBI and re­stricts grant of loans.

It is also em­pha­sized that in es­tab­lish­ing one PBI branch in each dis­trict ini­tially, a cap­i­tal cost of 500 crores would be in­curred and should be borne by the gov­ern­ment. The Post Bank of In­dia, once op­er­a­tional, shall also shoul­der the fi­nan­cial loss of 6,346 In­dian Ru­pees in­curred by pri­vate couri­ers and email ser­vices dur­ing 2011-12. Meet­ing the gap is tricky right now be­cause post of­fice charges are highly sub­si­dized in the ru­ral ar­eas – 66% on an av­er­age and up to 85% in more re­mote ru­ral vil­lages. The unique­ness of th present post of­fice net­work of­fers la­tent room for so­cio-eco­nomic growth and devel­op­ment on a na­tional scale. The PBI could be an­other po­ten­tially fruit­ful project.

Sev­eral other projects to im­prove the postal sys­tem and its pro­cesses and ef­fi­cien­cies have also been ini­ti­ated. The Mail Net­work Op­ti­miza­tion Project ( MNOP) seeks to en­hance the com­pe­tence of mail­ing and speed post. Project Ar­row in 2008 over­hauled op­er­a­tions like sav­ings banks and remit­tances. It also fo­cused on brand­ing, tech­nol­ogy and in­fra­struc­ture of the In­dian post of­fice sys­tem. There is an­other ini­ti­a­tion that works to­wards cre­at­ing a na­tional data­base man­age­ment sys­tem of postal ad­dresses. At the Ma­hatma Gandhi Na­tional Ru­ral Em­ploy­ment Guar­an­tee Scheme (MGNREGA), wages are dis­bursed through post across 19 postal net­works in the ru­ral sec­tor of In­dia.

A par­tic­u­lar post of­fice has be­come a tourist at­trac­tion in Sri Na­gar. It is a float­ing post of­fice on the Dal Lake hav­ing been built on a gi­gan­tic boat and is op­er­a­tional since 2011,. It has a phi­lately mu­seum and sells lo­cal postage stamps too. Let­ters posted through this post of­fice have spe­cial post­marks de­pict­ing the scenic beauty of Jammu and Kash­mir. Some 1700 more post of­fices are lo­cated in this dis­trict at present.

In­dia is a mem­ber of two in­ter­na­tional postal or­ga­ni­za­tions – the Uni­ver­sal Postal Union ( UPU) since 1876 and the Asian Pa­cific Postal Union (APPU) since 1964. It ex­changes mail with more than 217 coun­tries and the postal com­plex in In­dia by air and land and is con­tribut­ing to so­cial, eco­nomic, bank­ing and tech­no­log­i­cal devel­op­ment. - S.F.

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