If everything falls in the right place, India Post may a feel of its glorious past, as some of the most reputed global financial firms have evinced their interest for tying up with the payments bank arm of the postal department.
Global firms such as Barclays, Citibank, Deutsche Bank, Western Union, Visa and domestic giants State Bank of India and Punjab National Bank are among the top contenders for partnership. The banks are eyeing on to cash in on India Post’s humongous network across the country.
Interestingly, the International Finance Corporation, a member of the World Bank Group, has shown interest in picking up a stake in the business. India Post has 1.5 lakh post offices across the country and 1.3 lakh in rural parts.
If sources are to be believed, large-scale modernisation drive across postal department’s branches, including computerisation and the gradual rollout of core banking solutions and ATMs, has wooed financial giants globally who are looking at exploring new opportunities in banking, mutual funds, insurance and money transfer.
Telecom and IT minister Ravi Shankar Prasad, who also has the charge of the Department of Posts said that government’s efforts of modernising India Post are bearing fruits and have become one of the reasons behind global financial giants showing interest in joining hands with the postal department. “India Post’s network and services are backbone for lastmile connectivity,” he added.
Notably, postal department bagged a licence for a payments bank from the Reserve Bank of India in August last year. The central bank also allowed 10 other firms and tech companies to operate payment banks, considered the likely new disruptive force on the financial landscape of the country.
Payments banks can accept deposits up to Rs 1 lakh but cannot grant loans. They can deposit their money in government bonds and issue debit cards but not credit cards. These banks are aimed at strengthening financial inclusion across India and slash cost of remittance and fund transfer.
The interest in partnerships with the postal department comes against the backdrop of the success that India Post has achieved after tying up with over 800 e-commerce companies, including Flipkart, Snapdeal and Amazon.
Records show, India Post’s parcel revenue, which registered a decrease of two per cent in 2013-14, grew 45 per cent in 2014-15 and a staggering 100 per cent till February in 2015-16. SBI, PNB, BoB, Union Bank, and IDBI Bank are among those sought an alliance with India Post for banking products and services.
In the queue for an alliance on the insurance business are HDFC Life, ICICI Lombard, ICICI Prudential, Bajaj Allianz, Kotak Life Insurance, Royal Sundaram and PNB Metlife.
Transfort and Western Union from the US have lined up for a deal on money transfer.State-owned telecom company BNSL wants to strike a partnership for the mobile wallet business, while American financial services giant Visa has approached India Post for a pact on ATM and point-of-sale transactions.