One of the more sensible developments is that of LIC acquiring majority stake in IDBI. The latter has been in deep trouble due to nearly 28% NPA. LIC enjoys customer confidence, and has a wide network. It has to change the name of the bank to LIC Bank on priority, and look at ways and means of restructuring the bank.
Though digital platform is not a forte of LIC, it would be advisable to take that route. In addition, LIC can spare space in its offices for the Bank to have miniature branches, giving it more reach. It can also encourage all its Policy holders to open account in the new branch and shift their policy payments through these accounts. Even if LIC decides to shift 50% of its premium collection to the Bank, it would make a huge difference to the liquidity.
As any seasoned Financial guy knows, the real business of an insurance company is in its investments. LIC has a track record of investing in most of India's Blue Chips over the past 50 years, and this should serve it in good stead in managing the Bank.
This is one development that will be watched with interest in the days to come.
While Government has been innovative in agreeing to LIC's acquisition of IDBI, it is still surprising that the Government has taken only reluctant steps to utilize the core competency of India Post. India Post has its presence in every nook and corner of India, is trusted, and provides the last mile connectivity to the remotest person living in the country. Its core business of delivering letters is redundant. While Courier companies have moved deftly to become logistic providers for the online distributors, India Post has been sluggish and may have missed a good opportunity.
While India Post has been given permission to start Payment Banks, the penetration is slow. What it needs is a Minister like Gadkari, Piyush Goyal or Dharmendra Pradhan - someone with the conviction to push the sluggish manpower.
India Post can also play a major role in supporting farmers in the hinterland and can be linked with procurement agencies to manage procurement of Agricultural Produce.
The sheer reach of India Post is an immense asset that needs to be harnessed. Its network can be thrown open to the Private Sector to use it as a Distribution Channel. It can sell anything from Postage Stamps to Internet Cards to Facilitation Services for the Rural folks for a variety of online activities.
The infrastructure is available. The manpower needs to be retrained, but that is not difficult. What is required is vision to exploit the opportunity.
