Task force bats for banking, insurance, e-commerce via post offices

A task force under T S R Subramanian for suggesting ways to leverage the post office network has suggested the government set up a holding company under thedepartment of posts for immediate rollout of banking,insurance and e-commerce services through India’s 155,000 post offices.

In its report, given to Communications & IT Minister Ravi Shankar Prasad, the task force has said the holding company should have five verticals, including those for banking, insurance and e-commerce, and it should start work immediately.

Subramanian has said in the report that e-commerce could be the second-largest activity, after banking, that could help the department of posts emerge as one of biggest players in the world. It has also suggested establishing Post Bank of India as a separate entity that will have a branch in each district in the first three years, with an initial capital of Rs 500 crore to be funded by the government.

Post Bank of India and the Pradhan Mantri Jan Dhan Yojana could complement each other for financial inclusion, Subramanian has said. The report also notes that post offices have more than Rs 6 lakh crore in deposits, the highest in India after the country’s largest bank, State Bank of India (SBI).

According to the committee’s estimates, restructuring of the postal network could lead to creation of more than 500,000 direct jobs, in addition to other indirect jobs, within five years. “We have proposed a holding company under the department of posts with five verticals. Three of those — for banking, insurance and e-commerce — could start working immediately. Government services and business-to-business vertical could start as we go along,” Subramanian has said.

In a statement, Ravi Shankar Prasad said the committee had given its suggestions, which the government would consider seriously. The government would come up with a structured response on the committee’s recommendations. “I would like to assure that not a single person in the department of posts will lose his or her job as we undertake reforms,” he added.

Losses incurred on sale of post cards, inland letters, speed post — compensated through subsidies — is one of the main reasons for the poor financial health of the department, the committee has said in its report. But it has suggested that India Post should continue to offer these services at relatively low costs, as it is the obligation of the government to give affordable communication tools to the public.

“Though the committee has pointed out the losses due to subsidy, I would like to assure people that we are not considering increasing the cost of postal services; these are a common man’s tools for communication,” said the minister.

The department’s revenue increased about 43 per cent between 2007-08 and 2011-12 but its expenditure rose 96 per cent during the period, resulting in a net deficit of about four times, the report said. “Today, couriers reach Tier-I and -II cities and, at the most, Tier-III ones. There is hardly any service available in Tier-IV and more remote towns. Post offices can play a big role in bridging this gap,” Subramanian has said.