The government’s push to convert more than 1.5 lakh post offices into banking outlets may benefit HDFC Bank, ICICI Bank, and State Bank of India the most, as these lenders could tap into the nearly Rs. 15 lakh crores of savings in the post offices to sell other financial products like mutual funds and insurance.
“The postal network will be connected to the banking network, enabling online transfers of payments between post office accounts and bank accounts,” Pawan Kumar Singh, Deputy Director General, Department of Posts, explained. “Because more than 90% of post offices are located in rural areas, the scheme will assist farmers, labourers, senior citizens, and women.”
Furthermore, it provides the way for future banking models that might be entirely digital, lowering loan costs, improving service standards, and expanding geographic reach.”
Customers will be able to access their post office accounts through net banking, mobile banking, ATMs, and online transfers of monies between post office and bank accounts, according to the union budget recommendations. Farmers and senior citizens in rural areas will benefit the most from this because it will allow for interoperability and financial inclusion.
“Transitioning all post offices to the CBS platform will improve financial inclusion in a customer-friendly manner; key beneficiaries include banks like Axis, HDFC, and SBI, as well as low-cost housing financiers, SME lenders like Federal Bank, Karur Vysya Bank, and fintechs,” said Kunal Shah, analyst at ICICI Securities.
As of March 31, 2021, 1.5 lakh post offices across the country have deposits of roughly Rs 12.5 lakh crore, according to estimates. Fresh inflows through various postal deposit programmes are expected to reach Rs 8.5 lakh crores in FY22-23 under the National Small Saving Fund, according to the budget.
As of February 2021, postal deposits under various schemes—monthly income scheme, recurring deposits, term deposits, and savings bank schemes—accounted for about 70% of the small savings scheme corpus.
“The government’s decision to connect 1.5 lakh post offices to the core banking system for financial inclusion will result in more money flowing into savings schemes, mutual funds, and insurance,” said Nitin Jain, Partner, PwC India. “By bringing in more new credit clients, this will also assist to increase credit access.”
The postal network is digitally connected on its own. The Department of Posts recently unveiled ePLI bond, a digital form of the postal life insurance policy that users can access through Digilocker. The policy bonds for Postal Life Insurance (PLI) and Rural Postal Life Insurance (RPLI) are accessible in “electronic form,” and the Department of Posts will regard the digital copy as a legitimate policy document for all transactions.
“The move on post offices will assist the government’s goals to grow digital banking in the country,” said Murali Nair, President of Banking at Zeta. “The bulk of people, particularly in rural areas, use post office services to deposit their money.”
In a note, Juris Corp stated, “The inclusion of post offices in the core banking system opens doors to the country’s financial system to the remotest and most excluded sections of the country.” “The budget aims to address financial inclusion through both physical and virtual networks.”
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