Wednesday, May 15, 2013

India Post needs to reorganize its services first; banking can happen later!

Dear Comrades,

India Post needs to overhaul its services and become more efficient than private couriers. When it reaches such a stage, private banks will then approach the government to seek permission to open branches attached to India Post offices
The deadline for submitting applications to the Reserve Bank of India (RBI) for new a commercial banking license is fast approaching and the names of prospective applicants are not yet known.
In the recent past, media reports and articles indicate that large business and corporate bodies have shown definite interest, some of which are already associated with financing companies, but actual applicants’ names may be announced by RBI after the closing date.  It may be recalled that the Parliamentary Standing Committee has not favoured issuance of licenses to new entities, particularly those associated with big business houses, as it feels that this may lead to corrupt practices.  
Amongst the contenders, India Post has shown keen interest but its enthusiasm has met with a negative response from the ministry of finance, which has pointed  out that India Post has no actual credit handling experience that is so relevant to operate a successful bank.
One may surmise the reason for the ministry of finance’s reaction in this fashion. India Post has suffered a loss of Rs6,346 crore in 2011-12 and it may have increased further for the year ending March 2013.  Details will be probably known by September this year.
Due credit must be given to India Post, the world's largest postal service, covering the whole country reasonably well at throw away prices!  However, the major problem actually refers to its inefficient, non-imaginative and inefficient administration which has hardly any motivation to perform well.
In effect, it is not profit-oriented.  The postal employee, who gets the benefit of being a government servant, has practically trouble free life long service with increments and periodic promotions.  S/he has no need to do customer service gimmicks and is not answerable for their poor service in terms of ‘lost’ or ‘delayed’ mail or service.
In fact, simply because of this inefficient outlook and lack of incentives to perform, competition from private courier services has grown into very large enterprises.
Though introduction of “speed post” and now sort of courier service to specific destinations at low prices have been found useful, customers still tend to depend upon their regular private couriers, almost at double the cost.  Speed and confirmed delivery are essence of contracts for business that private courier companies can and do guarantee, which India Post is unable to match in practice.
Most post offices are sitting on government premium property sites.  The postal rates are perhaps the lowest in the world and at this income they will not be able to reach profit making stage, unless these are revised upwards.
Philately, for example, is big business, and stamp collecting, including issue of First Day Covers (FDCs)—a popular growing hobby which starts at childhood (for most)—helps to broaden general knowledge and becomes a money spinner, in which one lands up on an antique or misprint of a stamp.  But visit any post office to buy a commemorative stamp, you will be directed to go and get them in the GPO! Why can't the post office, however small it may be, sell these stamps and FDCs?
Likewise, India Post also offers foreign exchange but try to buy them without a hassle!
Under the circumstances, India Post needs to overhaul its services, revise postal rates upwards to meet the growing cost; introduce adequate rewards and incentives to its large employee force and become as efficient as a private courier service, if not better them in some ways.
When it reaches such a stage, private banks will then approach the government to seek permission to open branches attached to India Post offices, as such a move may serve the ultimate purpose of making banking easy to the rural folks!
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
Related Posts Plugin for WordPress, Blogger...
Related Posts Plugin for WordPress, Blogger...
Related Posts Plugin for WordPress, Blogger...