Post Office—its evolution from an institution of ‘communication’ to a ‘financial’ institution

The Post Office of India has evolved from an institution of ‘communication’ in the nineteenth and twentieth centuries to an important ‘financial’ institution of the early twenty-first century.  To understand this dramatic change in functionality of an institution identified with its traditional role of delivering letters and parcels requires an understanding of postal and financial history and above all migration history. This is because the Post Office has been the most important financial institution for millions of migrant workers over the past century. The 7 billion postal money orders (MOs) issued over 130 years since 1880 largely represent the remittances sent by migrants in India and overseas to their families back home.

An article from The IndianEconomic and Social History Review traces the evolution of these key postal financial services—MOs and small savings—over the past 130 years. It highlights the role played by the Indian Post Office in fostering financial inclusion in the twentieth century and how P OSBs eventually emerged in 1882 to extend banking facilities in the ‘interior of districts. The discussion on MOs provides the first history of internal and international migrants’ remittances in modern India. Finally, it illustrates how a banking habit was cultivated among the unbanked rural masses of the subcontinent.

In 2013, India Post (the new name of the Post Office of India) generated 60 per cent of its revenues from financial services offered through the largest postal network in the world consisting of over 154,000 offices, 90 per cent of which were located in rural areas. Faced with stiff competition from electronic communication technologies that challenge ordinary mail services, India Post followed the global trend of postal institutions re-positioning themselves as financial institutions and approached the Reserve Bank of India for a banking license that would enable it to offer more financial services.

While the Post Office has, as this article argues, played an important role in enhancing financial inclusion and development in modern India, this contribution is surprisingly unknown or unacknowledged. This is because the literature on the financial history of modern India has largely focused on lenders, such as, commercial banks and moneylenders. Thus, it argues that the financial history of modern India remains incomplete without integrating the Post Office as a key institutional actor.

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