ISLAMABAD: Finance Minister Shaukat Tarin has proposed that Pakistan Post (PP) should enter into Joint Ventures (JVs) with established banks, which would help raise the national savings rate.
He floated this proposal at a recent meeting of federal cabinet when amendments in rules of business of 1973 of Communications Division were discussed.
The Communications Division stated that owing to its national outreach of Pakistan Post Office Department (PPOD), Federal and Provincial Governments had been assigning various tasks to Pakistan Post as their agent.
Some of these functions, as per Rules of Business were: (i) Posts, including Saving Bank and Postal Life Insurance and ;(ii) agency functions on behalf of other Divisions such as military pensions, etc.
The Pakistan Post (PP) performed these functions under Schedule-II entry 6 and 7, of the Rules of Business, 1973. Mutual Evaluation Report (MER) by FATF in October, 2019 highlighted that out of 40 recommendations, 13 pertained to Pakistan Post. Ministry of Communications and Pakistan Post took a number of steps to recalibrate Pakistan Post’s financial, remittance and insurance services.
Life insurance was transferred to the newly created Postal Life Insurance Company (PLIC) under the regulatory framework of SECP, while the function of savings bank had already been transferred to CDNS.
There was an urgent need to amend Rules of Business, 1973 to remove existing ambiguities in Pakistan Post’s scope of work and mandate. The need for these amendments was further accentuated by the FATF-requisite reforms in various sectors undertaken by the Government of Pakistan. The impending restructuring of Pakistan Post, in line with the vision of the government, was going to further expand its scope of services. Pakistan Post intended to perform agency functions on behalf of other Divisions, Provincial Governments, agency alliances/ partnerships with corporate entities under regulatory regime of Government such as SBP, SECP etc.
The instant case of the proposed amendments in Schedule-II of the Rules of Business, 1973 pertaining to Communications Division was taken up with the Cabinet Division. As per its advice, the proposed amendments were shared with the Finance Division, Commerce Division, Law & Justice Division and Economic Affairs Division (National FATF Secretariat) for their views/comments.
The Cabinet was informed that the proposed amendments in the Schedule II of the Rules of Business, 1973 had been revised and duly incorporated in accordance with the views/comments of Ministry of Commerce, Law & Justice Division, Finance Division, and Economic Affairs Division (National FATF Secretariat).
The Law & Justice and Finance Divisions had opined against the inclusion of proposed amendment at Sl. No. 8 i.e., “Establish, regulate specialized entities in Logistics and Freight”. However, it was the considered opinion of the Ministry that the legislation regarding Logistics Regulatory Authority Bill drafted by the Ministry, was in advanced stage of legislation. Moreover, a company namely, Pakistan Post Logistics Company was being established in PPP mode with the assistance of the PPP Authority. Both these were crucial initiatives in advanced stage and it was necessary for the Rules of Business, to incorporate Sl. No. 8 to make PPOD a competitive organization and financially viable entity, instead of becoming a burden on the national exchequer.
During discussion, a member highlighted the need to delve on the larger question as to whether the government should be involved in running commercial ventures.
Minister for Finance & Revenue, Shaukat Tarin pointed out that the PPOD had an expanded national outreach with 14,000 branches across the country. Since the scheduled banks only catered to 33% of the population, the national savings rate was considerably low even when compared with regional countries. With its nationwide outreach, the start of banking services by the PPOD could help raise the national savings rate.
While recommending approval of the proposed amendments in the Rules of Business, the Minister for Finance suggested that the PPOD should enter into joint ventures with established banks, modalities of which he would discuss with Minister for Communications.
Copyright Business Recorder, 2021