Can India Post be the answer to banks greed?

Imagine a bank with pan India presence where you need just Rs 50 minimum balance in your bank account (with no penalties) and Rs 20 is all you need to open this account. It might sound unreal at a time when private, foreign and now even public sector banks insist for a minimum balance anywhere between Rs 5,000 and Rs 1,50,000 and levy charges on almost any transaction you do with them, including cash transactions.

These figures are true and this savings bank is India’s postal department. For accounts with cheque facility, the minimum balance and initial amount needed is Rs 500, but still way cheaper than all other banks.

Postal savings accounts offer a rate of interest of 4 per cent on such savings, promises no yearly charges/ no hidden fees and has a massive branch network of about 1.5 lakh (about 1.3 lakh in villages and about 25,000 in cities and towns), the department has much bigger network than even the State Bank group combined (about 25,000).

To become the dream bank of the common man, the postal department only needs to ramp up its infrastructure and product offerings.

In terms of reach, it is a giant. Take a look at these figures. As on 27 December, 2016 about 23,091 post offices have been migrated to CBS (core banking services) and 968 ATMs are operational.
The postal department already has years of experience in maintaining savings accounts. ..

With ATMs becoming interoperable, India Post customers having debit card can do transactions on other bank ATMs and similarly other bank customers can transact on post bank ATMs. The CBS spread means you can transact your postal banking account in any of these branches covered under CBS, just like a normal bank.

And what more, the department promises no charges for any number of transactions you do at their branches and ATMs...The present industry situation offers a major opportunity for the department to get its act together and ramp up its infrastructure, technology platform to take on the competition. It needs to act in the following areas urgently:

One, create a strong technology platform that can offer mobile, internet banking to the postal savings customer…Second, look for synergies with the recently launched postal payments bank... Third, for such a big makeover, and competition with regular banks, the postal department needs to get its staff ready...

The bottomline is this: Time is ripe for the postal department to get its act together and ramp up its infrastructure to position itself as an alternative to common savings bank customers.

By: Dinesh Unnikrishnan
(This article was first published at http://www.firstpost.com. Reprinted with their permission)