What better way to reach out to last-mile rural folk than through the digitalization of India’s 156,000 post offices?
In a strategic move involving one of the largest Public Sector Undertakings (PSUs) in the country, the Indian government is attempting the gargantuan task of connecting 156,000 post offices with 14,000 branches of 45 Regional Rural Banks (RRBs)!
If things go according to plan, India Post—a department under the Ministry of Communications—will soon resemble a bank. The department’s network covers 125,000 post offices serving the needs of rural masses.
These post offices have earned the trust of local people and possess intimate knowledge of the locals, in addition to the experience of handling large transactions.
Digitalization under way
Reports suggest that India Post recorded a loss of Rs182.55bn (highest by any Indian public-sector entity) in FY20. However, its massive workforce and vast branch network should provide a great platform for an in-built banking system that could be profit making.
For that to happen, digitalization will have to be at the core of the transformation. According to a digital transformation partner for several government departments, Tata Consultancy Services, 155,000 post offices— the world’s 10th largest and most complex postal network—need to be pulled into a cohesive interlinked system that operates on a single platform.
Meanwhile, the Union government is expected to govern the proposed bank through a holding company. The RRBs, where the Centre already holds a 50% stake, will become subsidiaries of the bank, besides the existing India Post Payments Bank (IPPB).
IPPB’s experience of running a payments bank should help in India Post’s metamorphosis. Its managing director J. Venkatramu recently affirmed that the current coronavirus pandemic has doubled its transactions, notwithstanding the trials and tribulations faced by other payments banks: “The (number of transactions) has grown phenomenally since peoples’ routine movements were crippled.”
The payments bank—comprising 650 branches and a deposit book of over Rs2,500 crore—is the designated channel for the Indian government’s Direct Benefit Transfer (DBT) program primarily targeting citizens languishing below poverty line. The bank also runs various postal savings schemes, such as the Public Provident Fund (PPF), Kisan Vikas Patra, Sukanya Samriddhi, time deposit and recurring deposit.
Enhancing rural financial inclusion
With the introduction of IPPB’s digital payments app, DakPay, India Post has been successfully able to spread its network and reach every nook and cranny of the country.
According to Union Minister for Communications, Electronics & IT, Ravi Shankar Prasad at the launch of DakPay last year, India Post stood the test of time during the nationwide lockdown by serving the nation through various postal services digitally and physically.
“The launch of DakPay adds up to the legacy of India Post, which is about reaching out to every household. This innovative service will not only give access to banking services and postal products online, but it is a unique concept where (people) can order and avail of postal financial services at their doorsteps. I strongly believe that this double strength of service offerings in the form of online payments and home delivery of financial services, combined with a nationwide network of the postal department, will be another big leap towards our Prime Minister’s vision of a financially inclusive and an AatmaNirbhar Bharat,” Prasad said.
All these measures will help India Post to metamorphose into a highly digitized banking and financial services provider for India, according to the beliefs of Raj N, Founder and Chairman of tech firms Zaggle and ZikZuk. He said: “The Union government’s recent initiatives like the Digital Advancement of Rural Post Office for A New India (DARPAN) have helped the Indian postal network to add value to its services. This has also meant higher financial inclusion, especially in the rural areas, where a large chunk of the population still remains ignorant about banking services.”
Sharing the optimism, Rajeev Balakrishnan, vice president of fintech Infomatics Services, said: “Leveraging the latest information technology trends, India Post has been transitioning into a complete state-of-the-art digital banking network agency from its original avatar of postal delivery services. It has introduced various networking-based mailing and financial communications, and also set up a national data center to support various corporate and retail business activities. The transformation over the recent years has positioned India Post as a dynamic and trusted technology-driven organization.”