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Report of Expert Committee on Harnessing the India Post Network for Financial Inclusion.

 

EXECUTIVE SUMMARY

The India Post network with over 155,000 branches is twice as large as the outreach of all commercial banks in India put together. Over the years, the Post Office Savings Bank (POSB) has emerged as significant component of India Post operations and its revenues from financial services as a share of its total revenue have steadily increased over time to 45 percent today.

While the phrase 'financial inclusion' is relatively new, it is obvious that post offices were working on problems of financial inclusion many decades before the phrase was coined. The National Postal Policy1 also visualises an important continued role for India Post in delivering broad based banking and financial services:

“Nearly 16 crore people use India Post to save Rs. 3,23,781 crore as on March 31,2007. Out of this, deposits in savings bank account alone is Rs.16,789 crore. There is, therefore, a need for India Post to computerize and connect all its savings bank accounts so as to widen and deepen the level of financial transactions and offer banking services to the rural population. India Post sees a great opportunity for increasing the number of accounts and volume of savings.”

This Expert Committee was constituted to examine potential synergies between the efforts at broadbased banking and financial services delivery at India Post and the larger policy goal of financial inclusion. The Expert Committee examined the role for the postal network in financial inclusion in the context of the presently unmet demand for financial services, the core strengths and capabilities of India Post, as well as of the emerging policy, regulatory and business environment in this area.

 

Recommendation 1:

India Post should deliver lightweight, low-cost
bank accounts to all Indian citizens and especially to the financially excluded population.

 

Recommendation 2:

India Post should look for ways to leverage its low cost platform by providing India Post branded accounts to other strategic partners, such as MFIs, mutual fund and insurance companies, and telecom operators.

 

Recommendation 3:

India Post should apply itself towards the challenge of achieving high volumes of moneyorders where payments of as little as Rs.10 are achieved at a charge of less than Rs.0.1 while requiring no subsidy from the exchequer.

 

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