Global experience shows that financial services contribute 40-80 per cent of the revenues of the postal departments, according to Mr Hans Boon, vice president ING(FI I&GA), Head of PostBank International Consultancy. Financial services sector is currently growing at a faster pace while growth in business from mail services is more or less dependent on the growth rate of gross domestic product (GDP) of a country, he said. Mr Boon was speaking at a seminar titled India-Post 2010, jointly organized in New Delhi by Department of Post, The World Bank and Invest India Economic Foundation with an objective of harnessing the outreach infrastructure of India’s postal network.
He highlighted the successful privatization of postal services in the Netherlands and the setting up of Post Bank in collaboration with ING. The bank currently services 8 million clients which constitute 75 per cent of the adult population of the Netherlands and 80 per cent of their companies.
Various speakers suggested that India Post needs to leverage its gigantic distribution network and experience of employees in distributing certain financial products by acting as a front-end for financial products and services.
However, Dr Ashok Lahiri, chief economic advisor to the ministry of finance pointed out that issues regarding prudential regulation need to be addressed before its diversification into financial services sector. Ms Chanda Kochhar, executive director (retail banking) of ICICI Bank suggested, Bank can collaborate with India Post to offer state-of-the-art banking products to its customers like housing loans, car loans, credit cards, travellers cheques, demat accounts, etc. She added that besides commercial banks, Indian Post has synergies with other financial intermediaries like rural finance institutions, pension funds, insurance companies and capital market intermediaries like stock exchanges and mutual funds. The Department of Post currently has over 1.54 lakh branches of which over 1.37 lakh are in rural areas. It also has a large consumer base with over 100 million accounts and over one million customers visiting post offices daily.
Looking at the large rural branch network, Mr Boon also suggested that the post offices may cater to customers from lower income class and those below the poverty line as they generally get unbanked as banks concentrate on the premium and middle class customers.
Mr Lahiri also raised the issue of whether India Post should be a public sector monopoly, as the private sector may be biased towards the urban areas which have larger business potential, neglecting the rural sector. Ms Kochhar pointed out: There is a lot of synergy between post offices and commercial banks. They can together plug product and service voids at post offices, leverage delivery channel of India Post and technological strengths of banks and can provide convenient banking facilities in remote rural and bank deprived locations.
Dr Susan Thomas, associate professor at Indira Gandhi Institute of Development Research (IGIDR), suggested that the expansive network of post offices can be used to streamline the commodities trading in the country.