The important role that the post office savings avenue plays among the economically weaker sections of society is clear as the data reveals that only 13% of total customers in rural areas earn more than Rs 1 lakh a year while 75% of total customers have an earning of less than Rs 70,000 annually. This then proves to be a useful tool of savings for the rural population.

Those who use postal savings accounts have a very favourable demographic characteristic too. Users of post office savings account have an 80% literacy rate among rural customers, and this avenue is used by a lot of young people. The data shows that 25% of all rural account holders are less than 30 years while 60% are less than 40.

There is a need to channelise rural savings into effective arenas so that the available sum is used properly. In terms of savings capacity, rural customers who invest in postal savings account are able to save 30% of their income. This is a high figure but it requires proper management. The average cumulative stock of postal savings of rural customers stands at Rs 13,700.

The existing customers of postal savings accounts are also looking at other financial products and 14m rural post office savings bank customers have bought endowment schemes with an average maturity value of Rs 1.59 lakh. There is still a lot of ground that has to be covered in this area even though insurance products have been around for quite a while.

Mutual funds have quite a long way to go in rural areas. Only 26% of rural investors holding a post office account have heard of a mutual fund and even among these 76% would not trust a mutual fund with their savings. In terms of the process of investing, one in three rural postal investors consult friends and relatives while only 9% consult agents. Further, only 2% rural customers having a postal savings account have a credit card.

Public provident fund (PPF) is another popular means of investment in the country. But this does not have a very strong rural presence. A look at its customer base shows that 3% are farmers, 10% daily wage workers and 11% self-employed individuals. Overall, the rural penetration is limited as only 34% of total PPF customers live in the countryside.

Even after this the limited reach of the PPF scheme can be gauged from the fact that there is skewed distribution in terms of the states where these rural account holders stay : 64% reside in just five states -- Bihar, Gujarat, Maharashtra, Kerala and Tamil Nadu. This means that the coverage of the scheme outside of these areas is not very strong.