Barclays banking on India Post Service for expansion

Barclays Plc is planning to partner with India's Postal Department to expand its reach in the country.

Indian Postal Department has received approval for setting up a Payments Bank. Several European banking majors are eyeing the South Asian country for spreading their banking activities.

Barclays is aiming to spread its footprint in the country via India Post. According to sources in the know, India Post may allow its 500 branches selectively for spreading banking services in the country. Subsequently, the postal department will expand the network.

George Cherian, a Mumbai-based spokesperson for Barclays, told Bloomberg that "the partnership with India Post would give Barclays access to areas where we don't have a physical presence."

It's also learnt that Deutsche Bank AG and other 16 banks are showing interest in tying up with India Post for using its huge network for offering financial services in the country.

According to HT Media Syndication, India's major banks are also willing to tie up with India Posts.

The Indian banking majors such as State Bank of India (SBI), HDFC and Yes Bank are expressing their interest to partner with India Post Payment Bank (IPPB). The main attraction for global banking majors is the huge infrastructure of the Department of Posts.

In addition to the nationwide network, India Posts has Common Service Centres (CSCs), which offer several services including registration for Aadhar card and bill payments. The World Bank is also keen on working with Indian Post Payment Bank on consultation and funding.

A report of Hindustan Times published on Press Reader news site, CSCs in rural areas are providing connectivity and services.

They will sell insurance and other e-commerce activities. This is also another major reason that attracts global and domestic banking majors.

India's Communications Minister Ravi Shankar Prasad said, "It's a huge opportunity with CSCs in rural areas providing connectivity and services. They will sell insurance and other e-commerce activities and it will be a game changer."

India Post recorded a business volume of INR 800 crore ($117million). The Department of Posts has decided to form a separate unit to work on revenue sharing, service level agreements and other activities in partnership with banks. The new unit of India Posts will be headed by a new CEO.

Department of Post is among 11 organizations that have been approved for setting up Payment Banks in India.

Prime Minister Narendra Modi in August unveiled the Payment Banks plan for the country. Modi hopes that Payments Banks will help propel rural savings and bring all the poor people under banking network.

Payment Banks receives and disburses cash and manages surplus funds to support corporate customers for their daily cash requirements.