Postal dept to offer financial products through its network

Virendra Verma

Mumbai, Aug 31: The department of post (DoP) has decided to offer distribution of a wide range of financial products ranging from mutual funds (MF), debentures/bonds, government securities, insurance products and also act as depository participant through its post office network.

The move is aimed at tapping the small investors who have deposits with the post offices but do not have access to buy the various financial products.

DoP has already started selling the schemes of a number of MFs but is yet to start offering other financial products.

However, at this moment there are no plans to sell initial public offers (IPOs) of companies or act as broker for buying and selling of shares from the secondary market.

As part of the plan, DoP has initiated an education project for its employees titled “Post Office Savings Bank-Invest India Economic Foundation- Financing Literature and Education Project,” under the chairmanship of former Unit Trust of India (UTI) chairman SA Dave.
Other key members of the project are Amfi chairman AP Kurian, Mr Prithvi Haldea of Prime Database, NSE economic advisor MS Sahoo and DoP secretary B Som.

“The aim is to mobilise the savings of rural investors who have deposits with post offices across the country,” Mr Sahoo told The Financial Express.

The first meeting of the project, held at Delhi earlier this week, discussed the whole issue of moving towards the new strategy by post offices. The members of the project would be preparing the literature for DoP officials to make them aware about the various investment avenues for the investors and the kind of financial products suitable for different investors.

However, the module of the education project would be different from the normal personal investment as the functioning of post offices is different from financial products distributing agencies.
In addition, how to train DoP officials would also be taken up in the future.

According to DoP estimates, there are around 11 crore accounts holders with post offices compared to 2.5 crore investors in equity market and MFs.

“There is a huge potential in tapping the investor base in the country for them to invest in various financial products through post offices,” said Mr Sahoo.