The Hindu Business Line : India Post mulls foray into micro finance

Chennai, Oct. 14 The Department of Posts is mulling entry into micro finance. The idea is being discussed internally and is seen as being both profitable and aiding inclusive growth, according to Mr M.S. Ramanujan, Post-Master General, Chennai City Region, Department of Posts, told journalists here today.

Speaking on the sidelines of a function to announce a tie-up between the Department and Sistema Shyam Teleservices – the company that provides mobile telephony services under the MTS brand – Mr Ramanujan pointed out that the 1.55 lakh post offices have reached every nook and corner of the country.

“We have a post office in Siachen,” he said. This huge network, roughly twice the size of the number of bank branches in the country, gives the Department of Posts an advantage in providing micro finance.

He said that the move for ‘India Post micro finance services’ is still at a preliminary stage.

Various officials of the Department have often described their employer as “the biggest financial services provider in the country,” – an allusion to India Post acting as an agent of the Government in mobilising small savings. India Post is also into insurance, with its ‘Postal Life Insurance’ product.

Indeed, to improve its services, India Post is working towards introducing ‘core banking solutions’ software, so that financial transactions could be done seamlessly across the country.

It is against this backdrop that India Post sees itself as a good provider of micro finance.

The Department of Posts has made many attempts in the past to milk the benefits of its huge branch network. For instance, it wanted to bring in a service which it called ‘Data Post’ – a data base of residents, including their income and demographic profiles, which could be made use of by companies in marketing.

The service never took off, but when asked about it Mr Ramanujan said that the Department was still refining the idea and would launch it in the coming months.

MTS tie-up

The tie-up with MTS announced today is also an attempt to use the branch network. Under the agreement, MTS customers in Tamil Nadu and Kerala, can buy recharge vouchers at the post offices in the State.

The revenue-sharing formula was not disclosed. Initially, the vouchers will be available at 50 post offices in Chennai, but would eventually be available in more post offices.

Similar tie-ups, for more products, are in the offing. For instance, India Post is in discussion with Maruti Suzuki to sell small cars in rural areas, Mr Ramanujan said.

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