- Postal service said to lure 17 firms seeking partnerships
- India Post has preliminary approval to set up payments bank
Barclays Plc is seeking a partnership with India’s postal department, which won preliminary approval to set up a payments bank, as the U.K. bank strives to widen its reach in the South Asian country.
A partnership with India Post, as the service is known, would give Barclays “access to areas where we do not have a physical presence,” George Cherian, a Mumbai-based spokesman for the bank, said by phone on Friday.
The U.K. bank and Deutsche Bank AG are among 17 firms including three insurers that want to use the postal service’s network to deliver financial services, according to a person familiar with the matter, who asked not to be identified as the information is private. A unit of the department will offer the services initially through 500 branches and will later expand the operation across the country, the person said.
A tie-up opens up the prospect for lenders and insurers to distribute products and offer financial services through a portion of a network that has about 155,000 post offices across India. By comparison, State Bank of India is the nation’s largest lender by branches with 16,400 outlets.
The Department of Posts was one of 11 entities that won “in-principle” approval from the central bank in August for a payments banking license, which allows companies to collect deposits, facilitate money transfers and sell insurance and mutual funds. Through these lenders, Prime Minister Narendra Modi hopes to eventually tap into savings from rural areas that currently have limited access to banking services, and bolster credit growth in the world’s second-most populous nation.
Banks such as Barclays could also use the postal network to provide cash-management services to clients. In cash management, a bank collects and disburses cash, and manages surplus funds to support a corporate customer’s day-to-day operations.
Linus Chettiar, a Mumbai-based spokesman for Deutsche Bank, couldn’t immediately comment. Postal department spokesman N. N. Kaul didn’t answer two calls to his mobile phone.
State Bank of India, Punjab National Bank, IDBI Bank Ltd. and Yes Bank Ltd. are among other lenders that are seeking to partner with India Post, according to the person.