Revisiting citizen-centric saving models

Both the POSB and the EPFO are key to enhance our financial system’s ability to deliver value to the Indian citizen’s lives and manage their wealth

- DEEPTI GEORGE NANDINI VJAYARAGHAVAN

THE GENESIS OF the Post Office Savings Bank (POSB) and the Employees’ Provident Fund Organisation (EPFO) goes back to 1882 and 1952.These were conceived at different points in time,as state-backed solutions to promote savings back when citizens investing in instruments such as bank deposits and mutual funds were not widespread.

POSB garners voluntary savings while the EPFO mobilises compulsory savings. Both institutions have since delivered stable risk-free mediumand long-term returns for India’s citizens.

Fast forward to today, the government may decide, rightly so, to subject the POSB and the EPFO to regulatory oversight. This could be either as part of its frameworks for the Reserve Bank of India’s (RBI) All India Financial Institutions (AIFIs) or by way of a separate regulatory process.Quite unlike AIFIs such as Small Industries Development Bank of India and National Bank for Agriculture and Rural Development,the POSBand the EPFO have extensive retail-facing operations. Yet, they differ in capabilities and operations,and any regulatory oversight needs to be tailored to suit their respective characteristics.