Is Post Office Banking a way way out for financial inclusion?
Demonetisation of Rs 500 and 1000 notes has brought back to sharper focus the level of Banking Penetration in the rural hinterlands of eastern India, or more specifically, the lack of it. The economy has not fully recovered from the body blow it was dealt with by the MLM companies, the so-called chit funds, which had built their fortune of deceit on this very lacuna, and now demoinitisation.
Think of the marginalized wage earner at the bottom of the pyramid who does not have access to a proper banking facilities and it will be amply obvious as to why he has to literally hoard money to meet his contingencies. But then again, considering the sheer logistics involved, it is also not possible to provide even a semblance of banking facilities to these teeming millions who are outside the purview of proper banking. Not in the short or the immediate medium terms, at least.
Is there no solution then? There is: the friendly neighborhood, Post Office. The Indian Postal Service runs the largest network of post offices in the world (about 155,000 in the last count) – an overwhelming number (about 90 percent, say experts) are in the rural areas. With an average serving area of about 20 kilometers per post office, each serves about 10,000 people. With such a ready to use network, established infrastructure that is owned and operated by the Government, why can’t we use them to double up as bank branches?
The existing post office staff is well versed about the rudimentary stuff, having handled cash for eons (at present the system has the world’s largest Postal Savings Bank network, which was incidentally started way back in 1882!) . The people too have faith, personified as it is as the Government. Besides, what is stopping the Government from opening up these facilities to the Nationalised banks for sharing? Surely, their (that of the Bank’s that is) long standing excuse of not going rural with a vengeance – the exorbitant cost of running rural branches without a commensurate income – will not pass muster as the infrastructure will come at bargain basement prices, making the entire process extremely cost effective.
As for the issue of banking trained manpower, a good amount of the burden can easily be avoided by increased mechanization. Pass Books are already being processed by machines and indications are that the entire banking system is in for a major mechanization move forward. Why can’t, at least some of these machines, be deployed in the rural areas? And surely, an incentive based system offered to the existing Post Office Staff will be inducement enough to make them were the additional hat as a quasi banker?
I am well aware about the million reasons that can be, and will be put forward to explain as to why such a scheme of things will never work: the red tape, the legislation, the logistics, the employee unions, the apathy, the blah, blah, blah.
But then again, if the Nation’s agenda is financial inclusion, that too at the grassroots, then, what is stopping us from at least giving it one try? At the least, what’s stopping us from having ATM’s in all our Post Offices?
The piece was originally written for the Financial Express BFSI@Kolkata.
Genia Giri is a first year student of English in BESC – a leading Kolkata based educational institution. She has already completed a course in Corporate Communications from the institute and is now busy in equipping herself further for a career in Journalism. “I want to use my pen as a medium for positive change in the society” says Genia, who is pained to see the institutions that our forefathers fought to free from the colonial clutches, often going to the extent of sacrificing their lives, crumbling all around her. A practical and down to Earth person, Genia is astounded at how the most obvious solutions to most of our problems are ignored, often on the face of diversionary tactics employed by vested interests. The content of this piece, being a case in point.