Financial inclusion: The role of postal service

Bangladesh is pioneer in postal ATM service in South Asia. The country introduced postal cash card service two years back. Initially, postal cash card was usable only at selected post offices with the help of POS (Point of Sales) terminals. Since July 2013, postal cash card has become usable in ATM booths. Bangladesh post office has joined hand with Sonali Bank, the largest commercial bank in the country and co-branded an ATM service which is now in operation. Moreover, postal cash card is useable in some 3,000 ATMs of 33 commercial banks with the help of Q-Cash payment gateway.
Thus, clients of the post office bank in Bangladesh can now withdraw cash from ATM in different parts of the country. The number of co-branded ATMs, located in the premises of post offices, are few but there is a plan to increase it.  
The postal cash card has also widened opportunity for shopping and payments in some 8,000 POS across the country. Due to lack of technical compatibility, the benefit is yet to be tapped.  Few government projects, however, adopt the postal cash card to pay regular allowances to the beneficiaries.
But, the postal cash card and ATM service are yet to thrive as there is lack of effort in the government's side. The private players are already there and policy support makes them more efficient and competitive.
INDIAN SCENARIO: In February this year India got its first post office-based ATM (automated teller machine). The ATM was inaugurated at the head post office in Thyagaraya Nagar in Chennai. It is the stepping stone of Indian postal authority's ambitious plan for installing about 2800 such ATMs by the end of 2015.
The rationale behind such a move is to provide the rural and peripheral people better access to formal financial system. Having some 155 thousand (1.55 lakh) post offices across India, the postal department has comparative advantages on banks which have some 50,000 branches across the country.  That's why authorities have also planned to install some 135 thousand (1.35 lakh) micro ATM in all the post offices in rural areas.  
By opening the first post office savings bank ATM in the country, India has actually stepped into a wider area of postal-based finance across the country.
 SHARING KNOWLEDGE AND EXPERIENCE: The experience of Bangladesh can be a good example for India to extend and improve its operation and service. There are some important similarities in the post offices of both the countries. Most of the post offices in the two countries as well as most other countries in South Asia, lack adequate infrastructure. Located in old buildings with limited facilities and inadequate security system, one can't expect faster, modernised service.
Staffs and officials, mostly appointed two to three decades back, are also not capable to handle information technology, say laptop or computer. In Bangladesh, many post office staffs did not welcome such service rather regarded this as an additional workload. With staffs with such mindset, it will not be easy to provide better financial services in post offices. These areas need to be addressed properly.  
With technological advancement, the Indian initiative can bring better outcome.  
Indian postal authority is trying to get full-fledged banking licences. The Indian central bank, Reserve Bank of India (RBI), has agreed to allow such banking with some conditions. But, the Indian Finance Ministry initially opposed it. However, Indian postal department may be allowed for payment banking service.
PAYMENT BANKING SERVICE: Usually a payment bank accepts deposits only and the credit part is handled by other banks on behalf of the payment bank.  A good example is Brazil's Banco Postal. It was established in 2002 by the country's postal authority in a partnership with Bradesco Bank. The 10-year partnership ended in 2011 and Banck do Brasil becomes new partner. Currently, Banco Postal is serving more then 10 million people of the country, most of them are rural and marginal people. Earlier, these people had no access to formal banking as there were no bank branches or correspondents.  Now they have even credit card access.   
Media reports say that the Indian government is thinking use of about 155 thousand (1.55 lakh) post offices across the country as a payment bank to cover poor families under Prime Minister Narendra Modi's 'Jan Dhan' programme.
Bangladesh is yet to tap the opportunity of payment banking through post office. Bangladesh Bank, country's central bank, has been trying to push financial inclusion ignoring the postal finance. This is a wrong approach. Country's post offices have a wider reach to people than banks.   
OPPORTUNITY TO EXPLORE: In fact, the policy of Bangladesh and India to provide ATM services through post offices is a welcome move. In India, around 100 post offices covering 64 thousand (64 lakh) accounts have already migrated to core banking solutions (CBS) and some 25,000 urban post offices are scheduled to adopt CBS by 2015. All account holders will be provided with an ATM card.
In 2009, Pakistan Postal Service (PPS) decided to install ATM machines at post offices all over the country. But the programme has not been implemented yet. Only some ATM machines have been installed by banks at some post office premises.  
ELECTRONIC MONEY TRANSFER: It should be noted that the electronic money transfer, with the help of mobile phone, at a lower cost, has already gained popularity in South Asia. Sri Lanka introduced electronic money order (EMO) service through post offices in 2005. Bangladesh postal authority introduced electronic money transfer service (EMTS) in March, 2010 with 110 post offices. The service is now available at about 3,000 post and sub-post offices. India's DoP mobile money transfer service, introduced in June, 2011, is now covering many post offices in the country. Pakistan post's electronic money order service was introduced in September 2012. The electronic money transfer system through postal network brings the much needed financial services to the remote population of these countries. This provides an opportunity to extend postal-based finance across the region at a lower cost.
Despite much-hyped financial inclusion in South Asia, a large number of poor and marginal people are still far from getting financial services. Post offices have wide network in these countries. A well-planned investment is required to upgrade infrastructure and train manpower in the postal sector. Postal-based financial service will also bring vibrancy in the age-old postal services.  

[email protected]