This refers to the report "Last-mile glitch may spoil India Post's banking dreams" (March 14). The bankers' lobby has been vehemently opposed to the entry of post offices into the banking sector because it fears tough competition from the department. It is aware of the postal network's reach in rural areas, and also the low-management expenses that give the department an added advantage. Under the influence of the bankers' lobby, previous finance ministers have tried to take away all the benefits small savers and taxpayers used to get through post offices by reducing interest rates and removing tax benefits of some specific saving instruments. In regard to banking, the postal department has been working as an agent of the government and has no say in the formulation of schemes, interest rates or the returns the department should get from such schemes. Owing to the non-remunerative returns, these schemes become disadvantageous and the department plunges despite collecting huge deposits for the government. Banking is essentially two-pronged; collection and lending. The postal department has been doing the first activity for more than a century now but has not been allowed to undertake the second part. Given that the department has a highly-educated managerial cadre it should not be difficult for it to undertake lending, investment and managing of assets. The only bottleneck is its expansion. The postal department should initially undertake banking activities only in head offices and sub-offices instead of at all the post offices. Once the department stabilises, the banking function can then be extended to other branch offices as well.
Deepak Budki Ghaziabad
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