Financial Inclusion and Rural Money Market: The Experience of the Post Bank of Iran

The purpose of this study is to describe and evaluate the role of the Post Bank of Iran in the rural money market. Rural areas constitute a quarter of the population and at least one sixth of the country's Gross Domestic Product. The development of the money market plays a central role in improving the economic share of the village and its sustainable development. Almost 8.8 million people are directly covered by banking services. The direct population coverage ratio is 43.5 percent, and the total coverage ratio is 85 percent. Furthermore, the access penetration rate (i.e., the number of banking tools available for every 100 rural people) has reached 21 percent, which means that for every 5 people, there is at least one means of accessing banking services. About 12.2 million rural people have bank accounts in this bank, so the financial inclusion rate has reached 60 percent. Estimates indicate that this bank plays a role for 27 percent of the rural money market. In addition, it has attracted 3.6 percent of rural deposits. This has resulted in economic opportunities on the one hand, and economic and social cost-savings on the other. The total cost of economic and social opportunities for the expansion of financial inclusion in rural areas is about 172,1 thousand billion Rials, and the total direct incomes generated in these areas are equal to 27.4 thousand billion Rials. Therefore, the total economic and social opportunity costs together with the direct incomes are estimated at 199.5 thousand billion Rials.