REPORT ON HARNESSING THE INDIA POST NETWORK FOR FINANCIAL INCLUSION
An Expert committee on “Harnessing the India Post Network for Financial Inclusion” was constituted jointly by the Department of Financial Services, Department of Economic Affairs Department of Post and Invest India Economic Foundation (IIEF) under the Chairmanship of Sri. Ajay Shah. The Committee has submitted its report to the Department on 30.06.2010. The following are few excerpts in the said report.
“Nearly 16 crore people use India Post to save Rs. 3,23,781 crore as on March 31, 2007. Out of this, deposits in savings bank account alone is Rs.16,789 crore. There is, therefore, a need for India Post to computerize and connect all its savings bank accounts so as to widen and deepen the level of financial transactions and offer banking services to the rural population. India Post sees a great opportunity for increasing the number of accounts and volume of savings.”- (National Postal Policy)
The Committee has made the following recommendations: -
India Post should deliver lightweight, lowcost bank accounts to all Indian citizens and especially to the financially excluded population
.India Post should look for ways to leverage its low cost platform by providing India Post branded accounts to other strategic partners, such as MFIs, mutual fund and insurance companies, and telecom operators.
India Post should apply itself towards the challenge of achieving high volumes of moneyorders where payments of as little as Rs.10 are achieved at a charge of less than Rs.0.1 while requiring no subsidy from the exchequer.
India Post should evolve the moneyorder to become a mechanism for transferring money from one POSB account to another, instead of just being a mechanism for delivering cash from one person to another.
India Post must build a payments infrastructure, through an array of contracts with partners, connecting up all POSB accounts and accounts of its partners, toeffectively become a persontoperson moneyorder capability (through mobile phones or web browsers) for a large swathe of India.
India Post must elicit a large number of partners in terms of financial inclusion players, mobile service providers and innovative new technological choices in order to increase the size of the network.
India Post must work closely with a diverse array of government agencies so that their G2P payments requirements are met through a combination of POSB accounts held by citizens and money orders delivered by government to those POSB accounts. The Ministry of Finance must work with India Post in rapidly rolling out this platform and network, given its important implications for direct, targeted delivery of government subsidies.
India Post should play a role in the emergency credit aspect of financial inclusion, through a platformbuilding approach where private lenders deliver credit to the poor through a competitive framework.
India Post should request the addition of its financial inclusion project into the Terms of Reference of the recently announced Technology Advisory Group for Unique Projects, and the leadership team of the India Post financial inclusion project should closely engage in the work of this Group, so as to bring in the best practices for project management.
The role of the Post Office Savings Bank as an agent of the Ministry of Finance should be revisited and expanded to enable India Post to play a larger, direct role in financial inclusion and build appropriate enabling architecture.
The report concluded advocating a well functioning Public – Private partnership model for a sound business; the Government of India & MOF, this squarely addresses the care policy goals of financial inclusion; For the public at large, and especially for the poor, this will be on critical window to a rage of sophisticated and affordable financial products and risk management tools.
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