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India Post – Uttaranchal Gramin Bank Tie-up  

A)  Introduction

          “Financial inclusion” of rural India is a national challenge today. Established banks find it prohibitive to enter into the rural area for it implies high establishment costs and relatively low returns for them. Based on bio-metric technology, some banks have tried to enter the rural market with “Business Correspondent” model in the recent past. The impact has so far not been very impressionable perhaps because of lack of credibility that the rural masses have with the “Business Correspondent”. 

          India Post on the other hand with a huge network rides high on the credibility factor in the rural area. But its shrinking business in the traditional financial market because of relatively lower rates of interest in the P.O. S.B. Schemes, make it compulsive for the Department to seek for new business avenues around.

(B)  Objectives        

        Keeping in view this business opportunity and compulsions,  Uttarakhand Post has entered into a business tie-up with Uttaranchal Gramin Bank with the following twin objectives:- 

    (a)   Collection of high-end deposits on behalf of the bank.

    (b)   Disbursement of bank loans and collection of the re-payment installments(EMI) through Savings Bank Passbook Account and with the help of GDS (Gramin Dak Sevak) staff.

Both these services are rendered by Uttarakhand Post on reasonable charges. In short the endeavor is to expand the role of an agency functionary, that India Post has being playing on behalf of Ministry of Finance for long, to that of a Commercial Bank also for the reasons of better profitability and future prospects. Besides, India Post also plays socially challenging role of “Financial Inclusion” of the rural areas

(C)  The main features of the scheme are as follows

(a)   For collection of high-end deposits.

(i)    Customer will be identified by joint marketing of Uttarakhand Gramin Bank and the Post Office.

(ii)              Customer will be asked to open a savings account in the Post Office where he will deposit the money.

(iii)            Subsequently the customer will be asked to fill up the deposit forms and complete other formalities as required by the bank. 

(iv)             The Postmaster will send duly completed papers to the designated branch of the Bank along with cheque in favour of the Manager of that bank, corresponding to the amount of the deposit made by the customer. 

(v)                In case of more than one deposit on any day, the cheque with the list of depositors and papers would be sent.

(vi)             After scrutiny of all papers the bank will open an account for the customer and send the required Passbook/Fixed Deposit to the Post Office for delivery to the customer. 

(vii)           At the end of the term of deposit customer will apply for closure of the account in the Post Office. The paper will be sent to the designated bank where from final sanction of the payment will be sent to the Postmaster who will make further the payment to the customer through the Savings Bank account. 

(b)   For disbursement of loan and collection of repayment.

.              (i)                 The customer will be identified by the Post Office. 

(ii)              Application for loan and other formalities will be got completed from the customer by the Post Office GDS staff. 

(iii)            The Post Office will confirm the identity of the customer and send the papers to the designated branch of the bank. 

(iv)             The bank branch will process the papers and after satisfying themselves, the bank will sanction loan and send the cheque of loan sanctioned to the Postmaster. The Postmaster will open a Savings Bank Account of the customer and deposit the loan amount in that account. The customer can withdraw amount at his ease. 

(v)                Monthly re-payment EMI will be received by the Postmaster by cheque for the Savings Bank Account and further transferred to the designated bank on monthly basis alongwith required MIS. 

(vi)             In case the re-payment is stopped, the Postmaster will provide the service of soft recovery by inquiring the reasons for non-payment and conveying it to the bank authorities. 

(vii)           Account will be closed after last EMI is received. 

(D)   Advantages of the scheme

(a)          For the rural public-  

(i)                 Rural public will get banking services that includes high-end deposits, loans and repayment facility right at their doorstep through vast network of around 2500 rural Post Office branches in Uttarakhand. 

(ii)              The banking services provided will be transparent and therefore accountability will be maximum. 

(b)          For the Bank - 

(i)                 The bank will be able to deliver banking services in the rural areas at a relatively much lower establishment cost. Thus the objective of “Financial Inclusion” of rural areas could be comfortably achieved. 

(ii)              An army of around 6000 strong GDS force that provides Postal services in rural areas will assist the bank in regular recovery of the loans. 

(iii)            The bank can improve its business in the rural areas with the help of the strong age old credibility that India Post wields in the rural area. 

(c)          For India Post - 

(i)                 By increasing the agency function beyond Ministry of Finance to the Commercial Bank, the business prospects of the Department will revive especially in the background in the fact that because of low rate of interest on NSCs and TDs its business has shown shown a declining trend in the recent past. 

(ii)              India Post once again gets an opportunity to be socially relevant especially in the rural area and instrumental in the “Rural Financial Inclusion”.  

(iii)            Post Office SB Scheme as an instrument of transaction between the bank and the customer remains alive. 

(E)   Present Status 

          Presently the scheme has been started as a test case in 5 Post Offices linked to an equal number of bank branches with a network of about 95 Branch Post Offices.