India Post has been receiving brickbats after it was unable to service the last-minute scramble by savers to invest in post office schemes before their the small savings rates get reset with effect from April 1. But how can post offices, with their run-down facilities, old-world passbooks, reams of red tape and surly staff ever compete with plush new-age banks?
Well, they can on two counts. One, India Post is giving its nationwide network of 1.54 lakh post offices a complete makeover. The Department of Posts’ initiative to implement the Core Banking Services (CBS) across its vast network is making rapid progress, with over 20,400 post offices had already migrated to the CBS, beating SBI’s tally of 16,333 CBS branches. By creating a tech-enabled and friendlier interface with customers, CBS can transform the post office network, the way it did PSU banks over the last decade. India Post plans to set up 10,000 ATMs and 20,000 micro ATMs this year and has been asking for inter-operability of these ATMs with banks. Two, it is clear that it is going to be a long, long time before any Indian bank can hope to reach out to the small ticket savers whom India Post already services. With 1.54 lakh branches, 89 per cent of them in rural areas, post offices already have a stranglehold on all the semi-urban and rural pockets where banks have been struggling to establish a viable footprint. The customer base of the small savings schemes, at 35 crore accounts dwarfs the very successful Jan Dhan Yojana.
But these statistics are the very reason why Indian banks need to regard India Post as an ally. In an era where disruptive digital models are snapping at the banks’ heels, there is tremendous pressure on banks to downsize their branches and cut costs. An alliance of large Indian banks with India Post can create a banking behemoth which is hard to beat. Maybe, they can be frenemies?
Editorial Consultant