India Post banks on Kisan Vikas Patra to drive growth

CHENNAI: The recently relaunched savings scheme Kisan Vikas Patra is expected to drive growth for the struggling India Post this fiscal. In 2013-14, the Chennai city region generated a revenue of Rs 135 crore for India Post from financial services that include various savings and certificate offerings.
“We had set a revenue target of Rs 150 crore from financial services in 2014-15.But we will be exceeding that as we expect to generate good commissions from Kisan Vikas Patra (KVP),” said Mervin Alexander, postmaster general, Chennai city region.
The 20 head post offices in the region alone have sold Rs 20 crore worth of KVP certificates after the scheme was launched by Union finance minister Arun Jaitley in November last year. By the end of this fiscal, these post offices alone are expected generate Rs 180 crore from Kisan Vikas Patra.
“There is a novelty factor attached to the scheme as it has been relaunched after some time. Also, a lot of small businessmen are looking to invest in higher denomination certificates (Rs 50,000 and above),” Alexander said. The region has 516 departmental post offices.
The main demand for such savings certificates is coming from traders, salaried executives and government employees who are slated to retire soon. “The government employees would be getting lump sum money at the end of their tenure and they are looking to invest in such schemes. In any case, the government servants have always been a captive customer base for India Post in offerings like life insurance,” Alexander said.

In addition, India Post is also beefing up its ATM network across 50 major post offices in the region in anticipation of a banking licence. “All these will be onsite ATMs and the civil work is nearing completion,” Alexander said. These machines are expected to become operational within the next six months. “In the beginning, only India Post customers would be able to use them, but the services will be expanded to include customers of other banks once operations stabilize,” Alexander said. Currently, India Post has only one ATM in the city, at its T Nagar head post office.
Saving boost
In November last year, the Union government relaunched the Kisan Vikas Patra in an effort to mobilize funds
The scheme offers an annualized interest rate of 8.7% and offers to double investment in 100 months.
Certificates come in denominations of Rs 1,000, Rs 5,000, Rs 10,000 and Rs 50,000
Is targeted at the poor as an investment option and to keep them away from ponzi schemes.
In the last three years, savings rate in the country declined from 36.8% of GDP to below 30% on account of the economic slowdown. In order to encourage savings, KVP was revamped and launched