Indian Post Office

The old format of Post Office, that office which we have grown up seeing is fading fast.

The post office has been changing for several years now. It first got the strategy consultants McKinsey to work out a vision and road map towards reinvention, essential when the letter, the heart of the traditional post office, is rapidly disappearing. The department now has a new logo that signals that post office interiors have a new format, with prescribed appropriate furniture — and, critically, computers. It is on its way to connecting all “departmental” post offices through a core banking solution.
The strategic plan for Postal department to generate additional revenue has different plans.

One of the interesting things it started is to branch out in to life Insurance, in rural areas. Just like LIC but so far it is restricting itself to rural areas, with better and attractive return plans. There is much been invested in to training and other initial logistics without much hype. If done correctly, it will obviously generate huge revenue.

Recent to this is Department of Postal has decided to start a Bank of its own. The post office savings bank has huge deposits (totalling Rs 3.7 lakh crore at end-2009-10, nearly half of banking leader SBI’s) but also makes huge losses (net deficit 94 per cent of revenue in an exceptional pay commission award-burdened year, and 61 per cent in the more normal previous year, 2008-09).

It can be said that the post office savings bank does not get depositors out of its own effort. They walk in because of better (administered) returns and tax advantages. That is why collections fluctuate according to whether banks’ deposit rates appear more or less attractive at a given moment. This happens because, while banks and the entire financial sector have moved to market-determined rates which fluctuate according to the signals of monetary policy, small savings rates have been kept stable so as to encourage steady savings by common people.

The most important aspect is the leadership. Can Post Bank get the kind of leadership private banking has? Can Department of Post build kind of management like MNC banks have?

I think, it has clear advantage in terms of brand recall and the trust. Over the years Indian Post has been part of our common life and known for better returns. If done correctly, the bank promoted by Indian Post will have a very clear advantage.

It is a clear change time in Indian Post.