India Post Bank to be a game changer

It is certainly good to see the humble post office aim high with humility to set its goals, surviving the aggressive onset of express delivery services in the private sector. The India Post has got its bank incorporated in the name of India Post Payments Bank (IPPB) Limited, which is expected to begin operations next year. The entire branch rollout would be completed by September 2017, making the process fastest for a bank anywhere in the world. What makes it the fastest is presence of an existing infrastructure of 1.55 lakh post offices spread throughout the country, even up to the remotest village in a far-flung area.

While broadly, the IPPB would be a payment bank, it is being rolled out as part of the government’s initiative to further ramp up its financial inclusion programme. What the public sector banks (PSBs) have been mandated to do in cities and towns – take banking to the poor families through the Prime Minister’s Jan Dhan Yojna – the IPPB should be asked to do in the hinterland. It should use the latest Unified Pay-ment Interface that enables payment transactions through smartphones. The IPPB rollout should be in sync with the outreach of smartphones in the rural areas as well as with the ambitious telecom plans.  

The post office and its ‘dakiya’ have always been performing the functions of a payment bank through transfers like money orders, still used by migrant workers who send small cash back home. One can also open a savings bank account, a recurring deposit, keep small savings and even own cheque books. The trouble is, the service quality is much below par and pathetic, at times, even in big cities. But that is because of the age-old and dated system that cannot survive the modern ways of financial technologies. Since the IT infrastructure and the communication technology are available off the shelf, the IPPB can do what over a dozen other entities are doing by way of online money transfers. The advantage with the IPPB would be its huge resource of post office legacy. However, what must be ensured is that the IPPB should function on highly professional lines and be enabled to give a run for money to the private sector competitors or even the PSBs. Stakes are too high, for if the new venture succeeds, the work culture of the parent organisation, India Post, itself would change for the better. This is certainly a game changer for financial inclusion.

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