A Financial Inclusion in the Future

March 3, 2022

“In 2022, 100 per cent of 1.5 lakh post offices will come on the core banking system enabling financial inclusion and access to accounts through net banking, mobile banking, ATMs and also provide online transfer of funds between post office accounts and bank accounts," FM Nirmala Sitharaman, in her budget speech on 1st February, 2022. The India Post Office, trading as India Post, is a communications network that has been in existence for over 150 years. In addition to delivering mail, India Post offers various other banking services. Saving schemes including Fixed Deposit (FD), Recurring Deposit (RD), Savings Account, Public Provident Fund (PPF) etc. are some of the widely known services provided by the Post Office.

The role of India Post Payments in increasing financial inclusion is undisputed. They have tremendous reach and a trusted brand name since Post Offices or “Dak Ghar” are popular even in remote rural areas. Further, low risk factors and assured returns on post office saving schemes make them a popular choice amongst Indian citizens. Currently, post offices provide savings account services and payments bank services through the India Post Payments Bank (IPPB). Although IPPB is an extension of India Post, it is governed by a different body and follows rules & regulations as per the RBI.

Indian Post Payment Banks have been creating a great impact over the years according to India Post, particularly during the pandemic. Their customer base is mostly rural. We at Agrasar, have been observing a growing adoption of their services which are critical for financial inclusion in the lower socio-economic community in Gurgaon. This announcement during the budget for further technology enablement with respect to creating a digital infrastructure for post offices which they otherwise lack, will be a much needed step in the right direction. This will be helpful especially for farmers and senior citizens in the rural areas enabling interoperability and financial inclusion.

Our long standing partnership with IPPB, Gurgaon has helped us open over 500 zero balance accounts for the community members in Sikanderpur. Even though IPPB offers a lower interest rate of 2.25% as compared to India Post Saving Accounts which is 7.1%, their online banking facility, Direct Benefit Transfer Scheme (DBT), Digital passbook, cost-efficient and easy access are some of the reasons why people choose IPPB over Post Offices for banking. Furthermore, IPPB banks have been able to facilitate the process with minimal documentation and quick access. This has been a massive advantage for migrant workers since they lack documents and usually are time constrained due to their work commitments.

These camps are not only about financial Inclusion and opening bank accounts but they also facilitate registrations for various Government Schemes like Life Insurances, Sukanya Samriddhi Yojana, Mobile number linkage to Aadhar Card, Door-step cash deposit etc. Thus, at one point of time during a financial inclusion camp one person can get multiple work done through IPPB. Therefore, with India Post becoming a part of the core banking system in the near future would improve the existing banking process, enhance the facilities available, add value to the current banking system, and provide better resources which in return will make them more credible and an efficient banking system.

Sunia Shamsi