Banks in India had better sit up and take notice of this lumbering giant of a competitor, waiting in the wings to steal a march on them.
By seeking to engage a service provider who can supply up to 1.5 crore ATM/ debit cards in three years, the Department of Posts (DOP) is truly gearing up for its foray into banking.
The Department, which falls under the administrative control of the Ministry of Communications and Information Technology, may either source magnetic stripe cards or chip-based cards, or a combination of both, depending on the requirement.
It will issue cards in association with RuPay, VISA, and MasterCard, according to information on its website.
Also known as India Post, DOP is expected to become a Payments Bank once the central bank finalises its guidelines for differentiated bank licensing.
In its draft guidelines on Payments Banks, the Reserve Bank of India (RBI) said the primary objective of setting up such banks is to further financial inclusion by providing small savings accounts and payments/ remittance services to the migrant labour workforce, low-income households, small businesses, unorganised sector entities and other users.
Payments Banks are expected to achieve their objectives by enabling high-volume, low-value transactions in deposits and payments / remittance services in a secure technology-driven environment.
Given that it is already engaged in such activities, it will likely be a case of seamless integration into a new avatar for India Post.
Currently, India Post provides mail, financial and retail services through more than 1.5 lakh post offices.Systems integrator
The Postal Department set the ball rolling for its banking foray about two years back by hiring a financial services systems integrator to implement core banking solutions at all post offices and circle processing offices and installing ATMs at 1,000 locations across the country.