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M. Ramesh

CHENNAI, Jan. 10

CAN the Department of Posts (DoP) be more than just letters and parcels? It certainly has the potential to be, says Dr U. Srinivasa Raghavan, Principal Chief Postmaster General, Tamil Nadu Circle.

For example, why not allow the DoP, which is already a player in the financial services market, to also lend? There are many advantages in letting the Department to lend money, Dr SrinivasaRaghavan said in an interview to Business Line.

Stressing that these were his personal views and not necessarily the official position of the Department, he said there were at least two distinct areas where the Department of Posts could lend — small credit lending in rural areas and the call money market.

In the rural areas, where formal channels of credit are yet to reach, the DoP can play a useful role as a friendly moneylender. After all, the postman is in a position to personally verify the physical presence of the borrower in the town each day.

Besides, the rural borrowers are typically more "bankable" and therefore, non-performing loans would be almost nil, Dr SrinivasaRaghavan feels.

Similarly, there would be no harm in allowing the DoP to lend in the call money market, he said.

The Department handles a lot of cash all round the year through sales of stamps and other services such as Speed Post, Business Post and Express Parcel Post. In addition, it also vends other miscellaneous items such as application forms for various competitive tests and prepaid phone cards. (All this is apart from accepting public deposits, which have to be transferred to the respective State Governments. For this service, the DoP gets a commission from the Ministry of Finance, which was Rs 1,350 crore last year).

While the inflow of cash is there throughout the year, other businesses may require cash at specific times during a month. For example, on a `reporting Friday', a bank may happen to need funds. Allowing a large organisation like the DoP may also help bring down the call money rates.

The DoP is a huge organisation with a network of 1.53 lakh branches across the country. It is in contact with the public on a daily basis, and has the means to collect information and render a plethora of services — if it is allowed.

According to Dr SrinivasaRaghavan, there are many possibilities. For example, can the postman be a "collection agent" for credit card issuing banks? He makes a distinction between a `collection agent' who merely collects a cheque and gives a receipt, and a `recovery agent' who demands payment. A postman, Dr SrinivasaRaghavan says, can never be a recovery agent, but can be an effective collection agent.

Selling insurance is another area which the Department is interested in. According to Dr SrinivasaRaghavan, there are many plain vanilla insurance products — accident cover, for example — which can be sold across the counter. Allowing the postal department to sell such insurance products (without having to go through the route of `corporate agency') will help insurance reach out better to the public.

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