Citizens' Issues
India Post needs to reorganize its services first; banking can happen later!

India Post needs to overhaul its services and become more efficient than private couriers. When it reaches such a stage, private banks will then approach the government to seek permission to open branches attached to India Post offices

 
The deadline for submitting applications to the Reserve Bank of India (RBI) for new a commercial banking license is fast approaching and the names of prospective applicants are not yet known.
 
In the recent past, media reports and articles indicate that large business and corporate bodies have shown definite interest, some of which are already associated with financing companies, but actual applicants’ names may be announced by RBI after the closing date.  It may be recalled that the Parliamentary Standing Committee has not favoured issuance of licenses to new entities, particularly those associated with big business houses, as it feels that this may lead to corrupt practices.  This aspect was covered by Moneylife recently (http://www.moneylife.in/article/new-banking-licences-clear-the-dead-wood-first/29133.html).
 
Amongst the contenders, India Post has shown keen interest but its enthusiasm has met with a negative response from the ministry of finance, which has pointed  out that India Post has no actual credit handling experience that is so relevant to operate a successful bank.
 
One may surmise the reason for the ministry of finance’s reaction in this fashion. India Post has suffered a loss of Rs6,346 crore in 2011-12 and it may have increased further for the year ending March 2013.  Details will be probably known by September this year.
 
Due credit must be given to India Post, the world's largest postal service, covering the whole country reasonably well at throw away prices!  However, the major problem actually refers to its inefficient, non-imaginative and inefficient administration which has hardly any motivation to perform well.
 
In effect, it is not profit-oriented.  The postal employee, who gets the benefit of being a government servant, has practically trouble free life long service with increments and periodic promotions.  S/he has no need to do customer service gimmicks and is not answerable for their poor service in terms of ‘lost’ or ‘delayed’ mail or service.
 
In fact, simply because of this inefficient outlook and lack of incentives to perform, competition from private courier services has grown into very large enterprises.
Though introduction of “speed post” and now sort of courier service to specific destinations at low prices have been found useful, customers still tend to depend upon their regular private couriers, almost at double the cost.  Speed and confirmed delivery are essence of contracts for business that private courier companies can and do guarantee, which India Post is unable to match in practice.
 
Most post offices are sitting on government premium property sites.  The postal rates are perhaps the lowest in the world and at this income they will not be able to reach profit making stage, unless these are revised upwards.
 
Philately, for example, is big business, and stamp collecting, including issue of First Day Covers (FDCs)—a popular growing hobby which starts at childhood (for most)—helps to broaden general knowledge and becomes a money spinner, in which one lands up on an antique or misprint of a stamp.  But visit any post office to buy a commemorative stamp, you will be directed to go and get them in the GPO! Why can't the post office, however small it may be, sell these stamps and FDCs?
 
Likewise, India Post also offers foreign exchange but try to buy them without a hassle!
 
Under the circumstances, India Post needs to overhaul its services, revise postal rates upwards to meet the growing cost; introduce adequate rewards and incentives to its large employee force and become as efficient as a private courier service, if not better them in some ways.
 
When it reaches such a stage, private banks will then approach the government to seek permission to open branches attached to India Post offices, as such a move may serve the ultimate purpose of making banking easy to the rural folks!
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)
 

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COMMENTS

arun adalja

4 years ago

do we require more banks?we have enough banks and if you want more branches can open at any place. more banks more scam.

Jingo

4 years ago

Well.. R u sure they would be able to improve their services.. Isn't it the same problem with entities which are run by ministries.. Look at Air India, Indian Railways, India Post, BSNL, MTNL... Its the same bloodbath everywhere.. And it is for the simple fact that taxpayer money can be used as an unlimited source.. Of course most of the expenditure is towards salaries which are for inefficient, slothful people.. Who have no motivation as you say to improve customer service.. But a significant part of the money is also to be swindled away using corrupt means.. Look at the bansal - singla controversy.. Dd anyone think that for one position on the railway board someone would be ready to pay 10 crores!! Just imagine how much money he would be recovering from that post.. And do you think the likes of bansal or singla or manjunath would not claim any more money later... The would have all been rolling in croresand crores of cash..

Noone is talking about the process of recruitment.. Everyone knows bansal made a mistake,, and they want to bury him as soon as possible and ge someone else to do the AUCTION... Yes.. Thats what it is.. Auction of jobs.. To corrupt, by the corrupt, for the corrupt.. Hail the great Indian democracy..

arun adalja

4 years ago

first do your service efficiently and do not run for so many things.couriers are doing best services and so post office lost the business.in foreign countries postal dept is doing excellent business and with efficient and speedy way.even tvs and glass bottles are handled by postal dept with gurentee of no damage.

nagesh kini

4 years ago

With the Internet letter writing is a gone art. Phones have rendered telegraphs out of fashion. Couriers and DHL rendered postal services redundant. Today's kids don't know what stamps or first day covers are!
The India Post at present is sitting on very valuable real estate in the heart of the city and in remote nooks and corners of India. It has an army of employees.
P&T has been in the business of deposit and to an extent postal insurance for long. Thankfully scam-free so far.
India Post should be allowed banking licence limited to deposits and possibly loans there against. No lending whatsoever.
Any way they are in it at present and they do have an outreach, infrastructure and experienced manpower.

anantha ramdas

4 years ago

Thank you Mr Warrier and Mr Dhoka for your observations. As you have experienced, the postal service needs professional assistance and help in reorganizing itself into an important element of our society.

Regretably, they do not have the knowledge, trained manpower (or womanpower) to convert a section of their operation to function as a bank, though, they do take or delivery moneyorders and the like.

Sadly, we must accept and admit that private enterprise is more dynamic to meet the growing needs than any government setup.

In the long run, 10/15 years from now, I anticipate that except for printing stamps, rest of the operations will be done by private bodies, who will provide an efficient system at less cost than it is today.

REPLY

M G WARRIER

In Reply to anantha ramdas 4 years ago

I am tempted to agree with the following observation:
“In the long run, 10/15 years from now, I anticipate that except for printing stamps, rest of the operations will be done by private bodies, who will provide an efficient system at less cost than it is today.”
But, for a different reason. The mass massacre of public sector organisations that is going on today, will lead to this position.

M G WARRIER

4 years ago

When the idea of new bank licenses was first floated in 2010, I had commented in a finance newspaper that, financial sector reforms should get attention simultaneously, or after quickly issuing VIP licenses (these words were not used). Now an impression is being given to aspirants including India Posts that it is a ‘now or never’ stance from the authorities on the issue of new banks. Like any other business, starting banks also should be an ongoing process depending on need and policy considerations for the smooth functioning of the financial system. GOI and RBI should view the issue seriously and give a clear idea about the ‘banking policy’ including structural issues and expectations from existing and new banks. India Posts has a history of ‘customer satisfaction’ within the constraints and a hurried conversion of a portion of the business it is doing into ‘commercial bank’ before doing necessary groundwork will be suicidal.

Vaibhav Dhoka

4 years ago

Postal banking is in mess.I had a postal savings account in Pune which was closed .In June 2011 balance read as 776 two years Sb account interest was to be credited.When I went to close account on 4th April I was shocked to note my balance reduced to Rs 557.On account closure my passbooks(3) were taken back and I was paid Rs 579 after 15 days.I am yet to hear anything from Post Master General in this matter.

Mahalaxmi racecourse: Can we keep the prime open land out of reach for common people, again?

People are losing interest in horse racing. In fact, the Royal Western India Turf Club is earning more money by leasing out the place rather than from racing. Do we really need this elite-reserved extravaganza when there are no open spaces left in the city for common people?

 
The Royal Western India Turf Club (RWITC), whose 99-year lease for the 226-acre racecourse in Mumbai is coming to an end on 31st May, is again in the news. While several people including Mumbai's mayor want the land to be converted into a public space or garden for ordinary citizens, some people feel that in case the lease is renewed then the RWITC should be asked to pay rent as per the current market prices in that area.
 
Moneylife also has pointed out how this seemingly elite and glamorous sport, with dwindling spectator interest, is occupying prime land in Mumbai just because it had turned into a cosy fiefdom for its rich and powerful patrons. Should ordinary Mumbaikars be satisfied with the tiny access granted to them by the RWITC for jogging, walking and yoga sessions? Or should we ensure that Mumbai’s green lung with all its restaurants be turned into a public space that is freely accessible to everybody like New York’s Central Park or even Bengaluru’s Cubbon Park, we had questioned. 
 
This time even Mumbai’s mayor Sunil Prabhu does not want to renew the lease agreement and instead wants to create a public garden at the racecourse land. He had sent a letter to BrihanMumbai Municipal Corporation (BMC) commissioner Sitaram Kunte asking the municipal corporation not to renew the lease for this prime and sea-facing land in the heart of Mumbai. In the letter, Prabhu had pointed out that for about a century, the BMC land has been out of bounds for common citizens and is used only by the elite class.
 
Three year ago, the RWITC locked horns with the BMC. Threatening to terminate the lease agreement, the BMC had sent a notice to the Turf Club accusing it of sub-letting part of the land to third parties without permission.
 
The BMC has already served two notices on the RWITC for several constructions, pertaining mainly to the restaurants, which are in breach of its lease agreement. It also ran into serious trouble with the fire department with two successive incidents of fire gutting the stands in July and September 2008. In one instance, the 100-year old colonial structure that houses the members’ stands caught fire in 2008 and it was discovered that it wasn’t adequately prepared with fire-fighting equipment. 
 
RWITC, which manages horseracing in India, is controlled by an elite bunch of super-rich businessmen and thus continues to occupy the sprawling 226-acre racecourse in the very heart of south Mumbai.
 
Looking at the publicity and glamour at the Mahalaxmi Race Course during the horseracing season, one would assume that the RWITC must have been earning huge moolah from this. Unfortunately, this is not the case. The rich man’s RWITC is showing more revenues that are generated from leasing out lawns for fancy society weddings and restaurants and from royalty earned from the catering business. 
 
In fact, since the renewal of its last lease, the number of restaurants at the racecourse has increased to six. Even the number of weddings and other functions taking place at the racecourse lawns has grown phenomenally over the years. At present, the Mahalaxmi Race Course houses restaurants like Tote on the Turf, Olive Bar & Kitchen and Gallops.
 
The 10-year lease of Gallops, one of the oldest restaurants, with large banquet/ party spaces, has also been renewed (again controversially) to BJN group of restaurants. This had also earned the displeasure of the municipal corporation, since the lease of the racecourse land itself expires in 2013 and it has no right to enter into a longer-term sub-contract. 
 
According to a report from the Times of India, RWITC chairman Khusroo Dhunjibhoy had said there would be no trouble (for the Club) in securing the lease agreement (again). “We have been managing this racecourse for over 100 years and have maintained this open space which is being utilised by general public as well. There were some small breaches but that have been taken care of. We also give around Rs50 crore each year in the form of taxes to the government. We have had positive talks with the officials in the past and see no reason as to why the lease will not be extended,” the report said quoting Dhunjibhoy.
 
In case RWITC is successful in renewing the lease, then is must be asked to pay rent as per the current market price feels some activist.
 
“It is necessary that a proper assessment of the market rent be made, before fixing the lease rent. The BMC should advertise its intention to lease the property, along with all the conditions it wishes to impose, and ask various parties to bid the amount of lease rent they are willing to offer. Only after such an exercise, would it be appropriate to fix the lease rent,” said an activist who does want to be named.
 
The activist also quoted the judgement delivered by the Supreme Court in 2G spectrum case. “In conclusion, we hold that the state is the legal owner of the natural resources as a trustee of the people and although it is empowered to distribute the same, the process of distribution must be guided by the constitutional principles including the doctrine of equality and larger public good,” the apex court had said.
 
“The poorest man who may be starving is an equal and rightful owner of this land, and it is necessary that the appropriate revenue is obtained for him,” the activist concluded.
 

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COMMENTS

hasmukh

4 years ago

The full area must be taken back and must belong to the Govt., for the benefit of the people. (politicians should be kept out).

Suiketu Shah

4 years ago

Ideally it shd have been India's Central Park.

Racing is dying and given the intentions of the people who rule our country,seems difficult they (or their successors)wl wait 99 years to grab this land.

madhukar sheth

4 years ago

Govt should just snatch the property for public use.
BUT REMEMBER,
Give this area, aname after its original Parsi Land owner, who gifted this land.

nagesh kini

4 years ago

Mumbai's aam ( whether it is mango or banana) janata badly require green open spaces to breathe a whiff of fresh air.
Shivaji and Priyadarshani , Oval Azad and Cross maidans are some the few remaining.
The big daddies can afford to take the races outside city limits like the Indian F1. Leave Mahalaxmi as it is for the Mumbaikars at large.
No renewal of lease at any cost.

jaykayess

4 years ago

The correct option is to levy rent at market rates. Certainly, RWITC can easily afford it.

But under NO circumstances should the land EVER be given back to the BMC!!! This would be an utter and total DISASTER, because within a few years, the BMC would sell it to some builder or developer who has sufficient clout.

We have seen several instances of BMC plots which were earlier reserved for open spaces, gardens, schools, playgrounds, parking lots, etc., being sold out under dubious pretexts. And many other cases of the land just turning into a wasteland plot.

We simply cannot let this happen to the race course. In any case, the general public DOES have access to the grounds - hundreds of ordinary people walk and jog there every morning and evening.

Factory output springs back to 2.5% in March; grows a meagre 1% in FY13

Factory output, as measured in terms of Index of Industrial Production, grew by just 1% in 2012-13 compared to a growth of 2.9% in previous fiscal, according to official data released today

 
India’s industrial growth bounced back to 2.5% in March on better performance of manufacturing and power sectors coupled with higher output of capital goods. 
 
Industrial production had seen a contraction of 2.8% in March last year. 
 
However, factory output, as measured in terms of Index of Industrial Production (IIP), grew by just 1% in 2012-13 compared to a growth of 2.9% in previous fiscal, according to official data released today. 
 
Meanwhile, the growth in the industrial output for February has been slightly revised downwards to 0.46% from the provisional estimates of 0.6% released last month. 
 
The manufacturing sector, which constitutes over 75% of the index, grew by 3.2% in March as against a decline in output by 3.6% in the same month of 2012. 
 
However in 2012-13, the growth in output of the key sector remained low at 1.2% as against 3% in 2011-12. 
 
Power generation grew by 3.5% in March this year compared to a growth of 2.7% in same month last year. 
 
During 2012-13, electricity generation went up by 4% against 8.2% in the previous fiscal. 
 
Capital goods output saw a growth of 6.9% in March this year compared to a decline in production by 20.1% in the same month of 2012. 
 
During the last fiscal, the capital goods production declined by 6.3% compared to a contraction of 4% in 2011-12. 
 
Overall, 10 of the 22 industry groups in manufacturing sector have shown positive growth during March.

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COMMENTS

snehakamath

4 years ago

It is extremely difficult to predict the right bottom. The infra companies however appear to be near the bottom.
These companies while going up also go in leaps and bounds and thus an investor missing out ton the opportunity.
GMR infra. GVKpower and LITL can be accumulated fora sure return in excess of 50% + within next one quarter !!
However one should be ready to hold on to these stocks even when there could be correction upto maximum of 15% more.
Alternate way is to buy 50% of the allocation now and wait for a correction ( if any ?) and buy the balance after such correction. This way if this itself is real bottom , You will atleast get the profits on your 50% allocation atleast. Which itself is pretty large

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