Report of expert committee on harnessing the India Post network for financial inclusion

The India Post network has over 155,000 branches - twice as many as the outreach of all commercial banks in India put together. This Report, produced by an inter-ministerial committee on financial inclusion, recommends that India Post harnesses the rapid IT and telecom capacity expansion to deliver three basic, integrated products to every Indian citizen: a savings account hosted on a lightweight banking platform, a broadbased payments network, and a competitive mechanism to deliver microloans to the poor.

The expert commitee recommends that India Post should:

• deliver lightweight, low cost bank accounts to all Indian citizens and especially to the financially excluded population
• look for ways to leverage its low cost platform by providing India Post branded accounts to other strategic partners, such as MFIs, mutual fund and insurance companies, and telecom operators
• apply itself towards the challenge of achieving high volumes of money-orders where payments of as little as Rs.10 are achieved at a charge of less than Rs.0.1 while requiring no subsidy from the exchequer
• evolve the money-order to become a mechanism for transferring money from one Post Office Savings Bank (POSB) account to another, instead of just being a mechanism for delivering cash from one person to another
• build a payments infrastructure, through an array of contracts with partners, connecting up all POSB accounts and accounts of its partners, to effectively become a person-to-person money-order capability (through mobile phones or web browsers) for a large swathe of India
• elicit a large number of partners in terms of financial inclusion players, mobile service providers and innovative new technological choices in order to increase the size of the network
• work closely with a diverse array of government agencies so that their G2P payments requirements are met through a combination of POSB accounts held by citizens and money-orders delivered by government to those POSB accounts. The Ministry of Finance must work with India Post in rapidly rolling out this platform and network, given its important implications for direct, targeted delivery of
  government subsidies
• play a role in the emergency credit aspect of financial inclusion, through a platform building approach where private lenders deliver credit to the poor through a competitive framework
• request the addition of its financial inclusion project into the Terms of Reference of the recently announced Technology Advisory Group for Unique Projects, and the leadership team of the India Post financial inclusion project should closely engage in the work of this Group, so as to bring in the best practices for project management
• revisit the role of the Post Office Savings Bank as an agent of the Ministry of Finance and expand it to enable India Post to play a larger, direct role in financial inclusion and build appropriate enabling architecture