Postal Saving Banks deposit on rise
KATHMANDU:
Postal Saving Bank is still going strong, against all odds, in the rural areas devoid of any banking services, but it needs to have a long term vision to survive in the current competitive market.
In the last fiscal year, Postal Saving Bank has been able to collect deposits of Rs 1.15 billion with the clientele of 46,000 depositors from its 68 branches across Nepal.
“In the remote areas it is the only means for the people to deposit their surplus cash and earn interest as access of other banking service providers are non existent in far-flung villages still bringing in sizable deposits,” said Yagya Raj Koirala, chief of Central Money Order Office that looks after Department of Postal Services’ financial services.
The existence of banks in those areas has resulted in increment of deposits with Postal Saving Bank despite its century old banking system.
The total deposit of Postal Saving Bank in mid-July 2010 was Rs 1.10 billion. Year before that it recorded deposits of Rs 980 million by mid-July 2009 and the year preceding that -in mid-July 2008 total deposits with Postal Saving Bank had reached Rs 820.7 million.
It is operating under Department of Postal Services has been collecting deposits since last 37 years. Though there are 177 post offices permitted to collect deposits only 68 are functioning as the branch of Postal Saving Bank. The account holders get seven to eight per cent of tax free interest on deposit.
Postal Saving Bank has emerged as an effective alternative in remote districts of Nepal such as Khotang, Dolpa, Dailekh, Jajarkot, Bajhang, Bajura, Accham among others.
“Despite the lucrative interest rate we are losing the depositors from urban to semi-urban areas in the absence of modern banking amenities,” pointed out Koirala.
The geographic penetration, especially in rural areas makes them ideal for the country like Nepal as the medium for expanding financial access. Moreover, low operational cost makes it ideal for collecting deposits from rural hinterlands than the urban centric banks.
Venturing into remote areas is costly business for commercial banks so that setting up of functioning branches is not commercially viable. The income from rural branches do not match the expenses incurred so that even regional level development banks and finance companies are reluctant to set up shop in remote areas.
Over 70 per cent of countries worldwide use post offices to deliver financial services to the areas where commercial banks’ footprints are not yet deep. Although in many nations this archaic system of deposit has become defunct.
“We are not able to attract more clients and to expand operations due to lack of efficient manpower, technological shortcomings, and inability to provide electronic payment facilities,” lamented Koirala adding “If Postal Saving bank starts ATM services in few parts, we can expect more deposits coming in.”
It needs to offer high quality, reliable and competitive services to its clients, if not it is likely to loose its depositors to more efficient banks and be defunct here as well.
Source: THT
Postal Saving Bank is still going strong, against all odds, in the rural areas devoid of any banking services, but it needs to have a long term vision to survive in the current competitive market.
In the last fiscal year, Postal Saving Bank has been able to collect deposits of Rs 1.15 billion with the clientele of 46,000 depositors from its 68 branches across Nepal.
“In the remote areas it is the only means for the people to deposit their surplus cash and earn interest as access of other banking service providers are non existent in far-flung villages still bringing in sizable deposits,” said Yagya Raj Koirala, chief of Central Money Order Office that looks after Department of Postal Services’ financial services.
The existence of banks in those areas has resulted in increment of deposits with Postal Saving Bank despite its century old banking system.
The total deposit of Postal Saving Bank in mid-July 2010 was Rs 1.10 billion. Year before that it recorded deposits of Rs 980 million by mid-July 2009 and the year preceding that -in mid-July 2008 total deposits with Postal Saving Bank had reached Rs 820.7 million.
It is operating under Department of Postal Services has been collecting deposits since last 37 years. Though there are 177 post offices permitted to collect deposits only 68 are functioning as the branch of Postal Saving Bank. The account holders get seven to eight per cent of tax free interest on deposit.
Postal Saving Bank has emerged as an effective alternative in remote districts of Nepal such as Khotang, Dolpa, Dailekh, Jajarkot, Bajhang, Bajura, Accham among others.
“Despite the lucrative interest rate we are losing the depositors from urban to semi-urban areas in the absence of modern banking amenities,” pointed out Koirala.
The geographic penetration, especially in rural areas makes them ideal for the country like Nepal as the medium for expanding financial access. Moreover, low operational cost makes it ideal for collecting deposits from rural hinterlands than the urban centric banks.
Venturing into remote areas is costly business for commercial banks so that setting up of functioning branches is not commercially viable. The income from rural branches do not match the expenses incurred so that even regional level development banks and finance companies are reluctant to set up shop in remote areas.
Over 70 per cent of countries worldwide use post offices to deliver financial services to the areas where commercial banks’ footprints are not yet deep. Although in many nations this archaic system of deposit has become defunct.
“We are not able to attract more clients and to expand operations due to lack of efficient manpower, technological shortcomings, and inability to provide electronic payment facilities,” lamented Koirala adding “If Postal Saving bank starts ATM services in few parts, we can expect more deposits coming in.”
It needs to offer high quality, reliable and competitive services to its clients, if not it is likely to loose its depositors to more efficient banks and be defunct here as well.
Source: THT
