India's postal service now comes bearing fintech services to stay relevant

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Praveen Gupta and Vijender Kumar (name changed on request) have something in common – the post office. Gupta is a government pensioner who has been using the post office for decades. Kumar has been a postal employee for 30 years.

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Both have seen the changing face of the Indian post office over the years – its journey from a simple deliverer of mails to a financial institution to a multi-tasker providing a myriad of services. They have also seen it fight to stay relevant the digital age.

“Today’s postmen and postal personnel are multi-taskers and not plain couriers. We are office personnel on the move,” said Kumar, who started off as a postman and went on to become a postal assistant, sorting mail and parcels and doing other tasks at a sub post office in the National Capital Region (NCR).

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Gupta, who invests in postal savings schemes, agreed. “I am 75. I have used  inland letters and postcards, and am sending emails and text messages now. I have done both money orders and online money transfers. I have seen the downfall of the snail mail. The post office is not the same but still holds a lot of relevance,” he said.

Changing face 

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Over the decades, the more than 150-year-old India Post has undergone a metamorphosis. Its primary role as means of communication has taken a backseat with the advent of the digital and the telecom revolution, and people losing the habit of writing letters.

In fact, the traditional postal services are only a fraction of what the department does. India Post is now a banking and financial institution, offers life insurance, is a government service provider and facilitator, an e-com player selling books, customised stamps, handicraft items, clothes and, even Gangajal.

“India Post is not the same as it used to be. Seventy per cent of our revenue now comes from financial services: postal banking, insurance, India Post Payments bank, etc.,” said Aman Sharma, secretary, Postal Services Board, Dak Bhawan, Delhi.

The postman is now part of a supply chain, he does not just deliver mail; he is a mobile multipurpose counter that provides a plethora of doorstep services across the country,” Sharma said, explaining the postal department’s evolving role.

Snail mail vs. digital 

So how’s the letters and mail section faring? Do people write snail mail at all these days when you can just pick up the phone and see your friends and family over a video call?

Postal employees explained how the traditional mail formats such as the inland letter, postcard or letters sent in envelopes lost out to the mobile phone and digital age.

“You won’t get anyone who would write physical letters these days when connecting has become so easy with smartphones and messaging apps. Even email is used for only official communication these days,” explained RP Sharma, postmaster at a sub post office in Ghaziabad.

Postcards and inland letters are a fading breed but not completely dead yet. But who buys them? “I have seen builders buy postcards and inland letters in bulk. They use these to send updates to customers,” the postmaster said, adding postcards are also used as acknowledgements to official communication, employment applications and so on.

Another senior postmaster at a post office in Delhi, who did not want to be named, said he has seen school students buying postcards and inland letters for projects and demonstrations. “Letter writing is confined to school projects. Students sometimes come to us to buy postcards. They say they want to write on real postcards for a real feel.”

Inland letters and postcards are still being used, Aman Sharma explained. “Roughly 500 million postcards are sold annually now, though it is a fraction of what used to be sold a few decades ago. People have stopped writing letters,” he said.

Roughly 870 million postcards were sold during financial year 2018-19 and 800 million in 2019-29, states the postal department’s annual report for 2020-21.

Letters out, documents in 

The mainstay of the postal services is packets, parcels, registered letters, speed post, business and express post, direct post advertising and not inland letters and postcards, Aman Sharma said. “Speed post is a major revenue earner with a traffic of roughly 400 million and a revenue of Rs 1,800 crore.”

The annual report shows that in the financial year 2018-19, speed post recorded a traffic of roughly 540 million and revenue of Rs 1,922 crore. In 2019-20, it had a traffic of 430 million and revenue of Rs 1,764 crore.

But in 2020-21 (till December 2020), traffic fell to 230 million and revenue to Rs 1,002 crore, mainly on account of the disruption due to lockdowns and the COVID-19 pandemic. This financial year, 303.8 million speed post articles were booked till December 2021.

The department’s flagship speed post service, launched in 1986, caters to both the government and private sectors. “We have bulk deals with the private sector to send official documents and letters through both registered mail and speed post,” the postal services board secretary said.

“People now use postal services to send documents and official mails, not personal letters. Many banks use our speed post and registered mail services to send credit/debit cards and other official mail to customers,” said the senior postmaster quoted earlier.

This writer spotted long queues at the busy post offices in Connaught Place, Gol Dak Khana and Dak Bhawan, where the clientele consisted of a mix of professionals, students and senior citizens.

“I have to send documents for admission to a college. I feel speed post is reliable and cheaper compared to leading private courier services,” said Aashta Singh, a student.

Standing behind her was Ram Chand, an office assistant carrying a bagful of official documents to be couriered outside Delhi. “Our office has been using the post office to send registered mails for years.”

According to India Post’s official dashboard, more than 18.81 crore registered letters were delivered till December 21 this financial year. The number was 16.47 crore in 2019-20, the annual report said.

The total traffic of packets (both registered and unregistered) was roughly 68

crore in 2019-20 while 9.45 crore parcels were sent in the same period, the annual report said.

Financial services the backbone 

Nearly 70 percent of India Post’s revenue comes from financial services. The postal banking, saving schemes and postal life insurance have existed for long but the India Post Payments Bank is a recent addition.

India Post Payments Bank was launched in 2018. There are nearly 50 million accounts, of which half are held women, Aman Sharma said.

“It is paperless and online. Postmen take the bank to the homes of people, where they can withdraw cash from Aadhaar-linked other bank accounts. It helps people in remote villages where ATMs do not exist or face network issues,” Sharma said.

The payments bank offers services such as saving accounts, money transfers, direct benefits transfers of government schemes, bill and utility payments, among others. It has tied up with private players such as HDFC Limited and LIC Home Finance Ltd for home loans, Tata AIG General Insurance and Bajaj Allianz for non-life insurance products and so on.

Post office savings schemes, recurring deposits, tax saving certificates and public provident fund, etc., have been always popular among government employees and low and middle-income groups. As per the annual report, the banking section had a deposit of around Rs 8.23 lakh crore (as on March 31, 2020) from nearly 370 million savings, recurring deposit, PPF and other accounts. The savings certificates vertical had a balance of about Rs 2.42 lakh crore.

But what about money order? Is it still in vogue? “Yes, the money order facility is still used to send money to remote locations. Roughly Rs 700 crore is distributed through money order every month,” the senior postal services board official said. There are remote locations where no ATM can reach and this is where the postal network and reach comes in handy, Sharma explained. 

A multi-tasker 

Apart from postal and financial services, there are many other government services such as passport seva, aadhaar enrolment and updating that India Post offers. Then there is direct payment for various government social schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme and old age pension that happens through post offices. The government also distributed seeds to farmers through post offices as part of an initiative. One can even buy Gangajal through India Post.

“There are many common service facilities: Post offices offer 70 facilities such as railway ticket booking, etc,” Sharma said. “Only the post office can offer doorstep service to every nook and corner where no private player can reach. This is the soft power and approachability of the postman.”

In fact, this vast network of 157,000 post offices and more than 400,000 employees, including 249,000 gramin dak sewaks, was used during the COVID-19 pandemic to deliver essentials, medicines and money across India at a time when train and flight services came to a halt.

About 3,700 tonnes of essential items in 750,000 bags were transported during the lockdown (April 24-May 31, 2020) through this network.

Sharma said Rs 16,000 to Rs17,000 crore was also disbursed through Aadhaar-enabled accounts during the COVID-19 pandemic through the payments bank. “It was a great help for people stuck in remote villages.”

In the red 

But amid the changing times and its evolving role, India Post is in the red, struggling to make profits. In the financial year 2019-20, India Post reported revenue of Rs 13,558 crore and net revenue expenditure of Rs 28,371 crore. The deficit stood at Rs 14,813 crore. In 2018-19, the deficit was Rs 13,646 crore.

The senior postmaster quoted earlier said the postal department needs an overhaul and policy rethink on how to reinvent itself and stay relevant. “If we do not reinvent fast, it will be too late.”

Various customers this writer spoke to said the department needed to smoothen its services and reduce the number of complaints. In 2019-20, the department received 1,749,750 complaints and 206,680 were carried forward from the previous financial year, the annual report said. About 1,808,657 complaints were resolved in 2019-20.

Amitabha Banerjee, a columnist and a former banker, said banking and financial services may not do much good for India Post, especially at a time when so many banks are already available and in today’s digital age when phone banking has become the norm.

“The postal department should try e-commerce. It can use its large network and delivery power to tie up with e-com companies to solve the last-mile delivery problem in remote places,” he told this writer from Kolkata.

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