Is India Post the answer to banks’ materialism?

Nagpur General Post Office ATM
Image: Nagpur General Post Office ATM

Bengaluru, March 17: The private, foreign, new generation and now even public sector banks of our country now insisting a minimum balance between Rs 5,000 to Rs 1,50,000 anywhere and from recently levying charges on almost all type of transaction you do with them, including cash transactions and balance inquiries.

On this hard time, imagine a bank with branches all over India, even in most undeveloped areas, where you need just Rs 50 as the min.  balance in your savings bank account and only Rs 20 is all you need to start this account. Do you think this is a Utopian idea ?

We have not written the figures above as per our wish. That figures are true and this savings bank is India’s postal department.

If you want an account with cheque facility, the minimum balance and initial amount needed is Rs 500, but still a lot cheaper than all other banks in the country.

India Post’s Postal savings accounts offer a rate of interest of 4% per annum on such savings, promises no yearly charges or no hidden fees like other banks and has a massive network of about 1.5 lakh branches. The India Post has much bigger network than State Bank group, they have only about 25,000 branches in Pan-India.

To become the dream bank of the common man of India, the India Post only needs to increase it’s infrastructure and product offerings. On The basis of reach, it is a big giant. Take a look at these figures.

As on 2016 December 27,  about 23,091 post offices have been migrated to core banking services (CBS) and 968 ATMs are operational.

The Department of Posts, trading as India Post, already has years of experience in maintaining savings accounts. Total outstanding balance under all National Savings Schemes (NSS) and Savings Certificates (SC) in post office is over Rs 6,39,254 crore as on 2016 March 31. On this, amount garnered under the savings accounts is about Rs 55,082 crore and Rs 76,181 crore under Recurring Deposit (RD) scheme.

Now, India Post customers having debit card can do transactions on other bank ATMs and similarly other bank customers can transact on post bank ATMs because the ATMs are interoperable.

The Core Banking System (CBS) spread means you can transact your postal banking account in any of these branches covered under Core Banking System (CBS), just like a normal bank. And what more, the India Post promises no charges for any number of transactions you have done at their branches and ATMs.

In short, this means India Post can offer a major alternative to a poor farmer or a salaried employee who don’t want to get harassed with the massive charges imposed by traditional banks, if it gets the act together.

The present banking industry situation offers a major opportunity for the postal department to get its act together and increase its infrastructure, technology platform to participate on the competition.

The bottomline is this: Time is mature for the postal department to get its act together and increase its infrastructure to position itself as an alternative to common SB account holders.

There is a big opportunity particularly given the widespread resentment against the materialistic commercial banks on account of the high transaction charges they levy on common customers.