Postal Department applies to RBI for banking licence

The Postal Department has applied to the Reserve Bank of India for a banking licence, the Communications Minister, Mr Kapil Sibal, said here on Wednesday.

Mr Sibal said he had written to the Finance Minister, Mr Pranab Mukherjee, to expedite the granting of licence.

Speaking on the sidelines of the postal policy round table organised by FICCI, Mr Sibal said, “A national postal policy targeting expansion and modernisation of the postal network would be announced during this year. The Government does not intend to issue licences to courier service companies, but would make it mandatory for them to register.”

Aimed at modernising postal services, the policy is expected to make the department adopt a more financially viable revenue model. It would also provide affordable services at all points in the country as part of its Universal Service Obligation, the Minister said.

The Department is also expecting large-scale private sector participation in providing value added services and extending its product range beyond the current core functions.

“There are tremendous opportunities for the private corporate sector to use its ingenuity to create innovative products and delivery mechanisms through the Indian postal network,” Mr Sibal said.

India currently has 1.55 lakh post offices, 95 per cent of which are located in rural areas.

heena.k@thehindu.co.in

Interest rates on post office savings scheme to remain fixed till maturity

The Government today said that the interest rates on post office savings scheme, except the PPF, will remain fixed throughout the term of the scheme.

It clarified that the interest rate for such small savings will be declared on April 1 every year and will remain valid till the maturity of the scheme.

However, in the case of Public Provident Fund (PPF), which is a 15-year scheme, interest rates would not remain fixed for the entire period. The annual interest accruals in the PPF account will depend upon the rate for that particular year, the Finance Ministry said.

“The rate of interest on small savings schemes will be aligned every year with the rates of Government securities of similar maturity ... the rates are fixed and not floating so far as individual investments except PPF are concerned,” it said, while responding to media reports that the interest rates on all small savings schemes are floating.

Interest rates on PPF

With effect from December 1, 2011, the Government has increased the interest rates on PPF to 8.6 per cent from 8 per cent now, and also raised the ceiling on annual contributions to the fund to Rs 1 lakh from Rs 70,000.

Interest rates on savings account in post offices also rose to 4 per cent from 3.5 per cent. Similarly, interest rates on deposits of other maturities too were raised from December.

“The rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. Any revision in interest rates in subsequent years will only be applicable to the investments made in the relevant period,” it said.

Kisan Vikas Patra

The sale of ‘Kisan Vikas Patras’ (KVP) has also been discontinued from November 30, 2011. There was an apprehension about KVP, which was kind of a bearer instrument, that it was used for money laundering.

In addition, the maturity period of monthly investment schemes (MIS) and national savings certificates has been reduced from six years to five years. MIS earns an interest of 8.2 per cent, but accounts opened on/after December 1, 2011, would not be entitled for bonus.

Besides, loans taken from PPFs would attract an interest of two per cent per annum from December 1, 2011.

Agents commission

The Government has done away with the commission paid to the agents for opening PPF accounts and Senior Citizens Savings Schemes, while the agents’ commission for Mahila Pradhan Kshetriya Bachat Yojana (MPKBY) has been fixed at four per cent. Besides, agency commission for all other schemes has been halved to 0.5 per cent.

With bank deposits giving over nine per cent return, people are now preferring parking funds in banks and hence there has been a net outflow from the small savings schemes, which are administered by the National Small Savings Fund (NSSF).

Govt sets eyes set on Post Office banks

New Delhi: The government's plan to tap into India's vast postal system to reach out to the unbanked population by utilising offices across the country as banks is expected to take some shape this year as the proposal has been sent to the Finance Ministry for its nod.

The idea that 1.55 lakh Post Offices could double up as banks is aimed at aiding the government's goal of financial inclusion, especially in rural areas. Once implemented, coverage of the country's banking network will increase three-fold in one stroke.

Around 90 per cent of the Post Office branches are in rural areas. In contrast, out of approximately 87,000 bank branches in the country, around 24,000 are in rural India.

India Post is the biggest postal network in the world, a major portion of which, about 1.4 lakh post offices, are located in rural India.

Although the idea has been around for a while, Communications Minister Kapil Sibal brought it centre-stage in July. However, before it takes shape, the Acts governing the banking and postal sectors will have to go through major amendments.

"Before applying for a banking licence, there are certain procedures that need to be completed. The work is in progress and the proposal has been submitted to the Ministry of Finance for its nod to go ahead," a government official privy to the development said.

The year may witness quite a few amendments to the 113-year-old Post Office Act, which are aimed at opening up the sector.

The proposed amendments in The Indian Post Office Act, 1898, include recognising the services of private courier players and bringing them under the regulatory ambit. This will legalise 'forbidden services' like sending personal letters through private courier companies.

However, a lot needs to be done within the Department of Posts before reforms are implemented in the sector, as the industry is demanding that the services wing of the DoP should be a separate entity. This could be done along the lines of BSNL, which was hived-off from the Department of Telecom, industry players have said.

During 2011, Sibal made efforts to kick-off reforms in the sector, starting with India Post.

"After many years, we have seen government is ready to listen to industry. Minister (Sibal) has said that no policy decision will be made without taking views of industry. It's a highly welcome move, but DoP officials are still not ready to open up," said an industry representative.

Sibal had announced a 100-day agenda for revamping the DoP, especially its services. The agenda was designed around objectives assigned under the 11th Five-Year Plan (2007-12).

The agenda included provisions to facilitate round-the-clock transactions by customers through web portals, call centres, ATMs and other tools to modernise and enhance the operational and service efficiency of the government-run 'India Post'.

Sibal attempted to create an image of modernisation in India Post by launching an e-post office portal with an e-commerce section. He pushed India Post to build partnerships with private players for utilising its capacity. The effort did show some results.

In June, 2011, India Post partnered with apparel retail chain Fab India to provide its customers with the facility to ship their purchases to destinations they want from the store.

The DoP also partnered with state handloom centres to provide logistics services to craftsmen for both national and international destinations.

Built up over the years, its reach in the hinterland caught the government's attention as a tool to reach out to the masses under public programmes.

The year for the DoP began with a partnership with the UIDAI to deliver Aadhar numbers. In November, the UIDAI roped in TCIL to support India Post, which could not manage the work load in view of inadequate printing facilities at Kolkata and Delhi.

India Post was printing about 1.5 lakh Aadhaar cards a day, whereas the UIDAI enrollment was over 10 lakh residents daily in that month.

The DoP was also seen as good option to disseminate wages to people under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). However, a lack of capacity and lax management posed questions over its service standards.

A parliamentary Standing Committee on the DoP found a huge gap between the wages disseminated by the DoP and the figures recorded by the Department of Rural development.

In 2009-10, the gaps in the data submitted by both departments widened to 13 lakh in terms of total MGNREGA worker accounts and over Rs 1,000 crore vis-a-vis the wages distributed.

During 2010-11, the DRD furnished the data one month later than the DoP. Upon examination, it was found there was a deviation of 29 lakh in respect of the number of accounts and about Rs 1,221 crore in respect of the amount disbursed vis-a-vis the DoP's figures, the Standing Committee said in its report.

Besides these glitches, a fund crunch left the DoP unable to address urgent and important requirements.

During the 11th Five-Year Plan, the DoP was allocated Rs 2,700 crore for technology upgradation of Post Offices. However, the Expenditure Finance Committee (EFC) restricted this to Rs 2,505.86 crore.

The final amount approved two years after commencement of the Plan was Rs 978 crore.

With immense potential and as possibly many hiccups on the way to realising them, 2012 will be the year to watch which way India's postal system goes.

Source: Financial Express

Investment in 10-year NSC will fetch 8.7% interest

The Government has raised the interest payable on National Saving Certificates to 8.7 per cent.

Accordingly, an investment of Rs 10,000 in 10-Year National Savings Certificate on December 1 this year will fetch Rs 23,435 in the year 2021. The Finance Ministry notified the new instrument on Tuesday, which will be available for investment from December 1.

According to the notification, investments in such a certificate will earn interest at an annual rate of 8.7 per cent, compounded semi-annually. The certificates will be available in the denomination of Rs 100, Rs 500, Rs 1,000, Rs 5,000 or Rs 10,000. There will be no upper limit for investment.

This Certificate can be transferred from a post office where it is registered to any other post office and it can be pledged as a security.

The Ministry decided to issue this instrument on the basis of the recommendations of the Committee for Comprehensive Review of National Small Savings Fund (NSSF), headed by Ms Shyamala Gopinath. Notifications regarding other instruments have already been issued.

Shishir.s@thehindu.co.in

Postal Department launches Moneygram service in Karnataka

The Department of Posts (DoP) has launched money transfer service in 59 head post offices in the State helping Indians living abroad to “swiftly” transfer money back home.

The money transfer solutions were launched following a tie-up with the US-based Moneygram International, a senior DoP official said.

“Receiving money is simple. The person remitting the money with any of Moneygram International agent overseas will have to pass on the reference number to the receiver, who will get the money in these post offices in no time by showing any of the ID such as ration cards”, the official said.

Following head post offices here would offer the Moneygram Service — Bangalore GPO, Rajajinagar HO, Jalalhalli HO, R.T. Nagar HO, HAL II Stage HO, Basavanagudi HO, Jayanagar HO and Channapatna HO, it was noted.