Ques. for Mains - Discuss about the rising force of postal banking in the retail banking market. Describe the need and importance of establishing Postal Savings Banks Forum in India.
The Minister for Communications & IT and Law and Justice World Shri Ravi Shankar Prasad will inaugurate the Postal Savings Banks Forum in New Delhi. This year’s forum is being organised by World Savings and Retail Banking Institute (WSBI) jointly with the National Savings Organisation (Ministry of Finance) and the Department of Posts.
The theme of this year’s Postal Savings Banks Forum will be “The rising force of postal banking in the retail banking market”.
The role of postal operators in the world of retail banking is often overlooked. Post Offices worldwide hold 1.6 billion savings and deposit accounts. This is second only to commercial banks, which hold about 2.5 billion accounts. Thus, post offices are critical to the pursuit of financial inclusion, which is recognised today as a vital pre-requisite to socio-economic development.
The Universal Postal Union estimates that several hundred million people, often without an account, use the Post to make and receive basic payment transactions such as domestic and international transfers, government payments and utility payments. Postal operators, in all their activities, have always relied on a business model based on large volumes and low costs. Combined with the universal service obligation through which the State gives the mandate to the Post to serve the entire population, these specific features make the Post a worthwhile ally in the fight against financial exclusion.
Financial inclusion brought about through the postal network is called postal financial inclusion. India has about 1.55 lakh post offices, which is more than the combined branch strength of commercial banks (about 1 lakh). The number of savings accounts held in post offices in India is about 31 crore, which is more than that of any commercial bank in the country. The postal network possesses excellent cash management abilities and is trusted for its governance practices. Thus India seems to have the right mix of ingredients to deliver concrete results in postal financial inclusion. Hence the WSBI Postal Savings Bank Forum is of considerable interest to the Banking Sector in India.