The Post Office has been providing affordable banking services to all sections of the society since 1882, making it the pioneer in facilitating financial inclusion in the country. India Post was a banker to small savers much before financial inclusion became a buzzword, or had even been coined as a phrase.
The financial services offered through the Post Office include micro and retail savings, remittances (both domestic and cross border), insurance, social security payments such as MGNREGA wages and Pension disbursements. Many third party financial products such as mutual funds and pension funds have also become accessible to the public thanks to the neighbourhood post office starting to retail them.
Out of the 155 000 post offices which provide retail financial services across India, 139 000 are in rural areas. In comparison, the scheduled commercial banks and Regional Rural Banks of the country together have about 85 000 branches, of which only about 34 000 are in rural areas. Another indicator of financial inclusion is the density of the banking network measured against population. The financial network is more inclusive when each branch of the bank has a lesser number of people to serve. In this regard, on an average, banks in India serve 14 000 persons per branch (16 000 in rural areas) whereas the average population served by each postal financial services outlet is only 7 175 (5 683 in rural areas). Further, the average number of India Post financial outlets per lakh persons is 13.93 as compared to 6.33 in the case of banks. It is also worth mentioning that our Post Office Savings Bank holds 24 crore accounts, more than entire populations of most countries.
The Post Office is now all set to enhance its role in financial inclusion thanks to a modernization project which it has taken up. A Core Banking platform is being set up for the financial services, and new services such as instant money orders have been introduced. Further, services such as the prepaid cards are in the pipeline. These measures will substantially augment India Post’s capabilities as a multi-faceted financial services provider.
One of the major issues of financial inclusion in India relates to the complexity of cash Management at the grass roots level. Support infrastructure for financial services is inadequate in many parts of the country, particularly in the small towns and villages. It is against against this background that India Post’s network, with its transparent, accountable and centrally managed network assumes relevance. This is a ‘ready-made’ network, where cash management and infrastructure issues have already been taken care of. Significantly, it is also a trusted and familiar network with roots in local communities where the village postmaster knows his customers personally.
India Post’s continuing stint as the banker to the common man over the last 130 years has been a fulfilling experience. We are rediscovering ourselves through the modernization project, and looking forward to the Core Banking platform and other the modern systems and practices being introduced into the Post Office. The future will see the Post Office playing a more active role in facilitating financial inclusion in the country.
We are keen to hear from our customers and friends on the subject. Do send in your comments, opinions and suggestions on the Post Office’s current and future role in financial inclusion.