Post Office Savings Bank (POSB)



The Post Office Savings Bank (POSB) was established by the British colonial government in 1877 to provide banking facilities for lower-income groups.1 Following Singapore’s separation from Malaysia in 1965, control of the POSB was transferred to the Postmaster-General of Singapore in 1966.2 In 1972, POSB was turned into a statutory corporation by the government to give the bank more management flexibility and financial freedom to improve bank operations.3 In 1990, the bank changed its name to POSBank.4 Eight years later, POSBank was acquired by the Development Bank of Singapore (DBS).5

POSB’s colonial past and its decline
The POSB was originally set up as part of the Post Office Service Department on 1 January 1877. It was the first of several savings banks established in the British Straits Settlements, which comprised Singapore, Penang and Malacca.6 Its operations came under the jurisdiction of the Postmaster-General, while overall policy-making was in the hands of a group of trustees appointed by the Governor of the Straits Settlements.7 Between 1877 and 1940, POSB enjoyed steady growth. The number of accounts grew from 211 in 1877 to 57,000 in 1940, while total deposits increased from 19,862 to 14.3 million Straits dollars.8


On 1 January 1949, the enactment of the Savings Bank Ordinance, 1948, separated Singapore’s POSB from other post office savings banks in Malaya.9 As part of the reorganisation, POSB’s assets and liabilities were divided between Singapore and the Federated Malay States. However, overall operations of the Singapore POSB remained under the jurisdiction of the Postmaster-General of Malaya. Management and control of POSB was transferred to the Postmaster-General of Singapore in 1966, a year after the island became independent.10

Between 1949 and 1955, the number of accounts with POSB more than doubled from 74,246 to 154,668, while total deposits increased from M$27.4 million to M$57.6 million. However, the bank’s deposits fell below the M$50 million mark from 1957 and declined further to M$37.4 million by the end of 1966.11

POSB’s new agenda and its revival
When Singapore stepped up its industrialisation programme after 1965, Minister for Finance Goh Keng Swee identified domestic savings as one of the ways to promote the growth of industries. Such savings could provide the government with a non-inflationary source of funds for national development.12 To promote domestic savings through POSB, the trend of decreasing deposits with the bank had to be reversed.

In 1968, a savings bank committee was formed to look into ways to promote savings through POSB. Chaired by Postmaster-General M. Bala Subramanion, the committee was made up of Elizabeth Sam from the Ministry of Finance, Han Kang Hong, a lecturer at the Singapore Polytechnic, and two prominent businessmen, Tan Teck Chwee and Lim Soo Peng. The committee held its first meeting on 15 March 1968 and completed its report on 27 April 1968. The report was accepted by the government in July 1968 and its recommendations on how to increase deposits and depositors taken up. This savings bank committee would later be reconstituted into a permanent advisory committee for the POSB.13


The strategy to increase deposits
The key recommendations implemented included raising “on-demand” withdrawal limits from S$200 once every seven days to S$500 once every three days, longer banking hours, exempting interest earned on POSB savings accounts from income tax, and accepting non-Romanised signatures for operating accounts.14 To encourage the young to save, a student’s gift account scheme gave an additional S$5 to any POSB student account with a minimum balance of S$5. A savings competition was organised among all government and government-aided schools with the incentive of a POSB lucky draw. A publicity campaign was also started to introduce the newly energised bank.15


The publicity and new measures succeeded. In 1969, POSB attracted 174,506 new accounts, compared to 10,596 in 1966. The bank’s deposits jumped from S$37.4 million in 1966 to S$57.7 million in 1969.16

Becoming a statutory board
At the first live televised broadcast of the POSB Luck Draw in September 1970, Minister for Communications Yong Nyuk Lin announced that the POSB would become a statutory board. Yong explained that the move would give the bank greater flexibility in providing more efficient services to its customers, thereby allowing it to become a more viable financial institution.17 The Post Office Savings Bank Bill was subsequently introduced in Parliament on 30 July 1971 to turn POSB into a statutory corporation.18

The Post Office Savings Bank of Singapore Act, 1971,19 came into effect on 1 January 1972.20 Following the enactment of the Act, the POSB ceased to be a branch of the Postal Services Department, although the bank’s link with post offices remained for many years, as did its ties with the Ministry of Communications. As an independent statutory corporation, POSB was run by a board of directors who were appointed by the Minister for Communications. Tan Chok Kian was named as the first chairman of the reconstituted POSB and head of its board of seven other directors.21

New services and facilities

After becoming a statutory body, POSB went about introducing a new look, improved facilities and better services. A logo that depicted the letters “POSB” in the shape of a key was adopted in April 1972.22 That same month, POSB opened a new fully air-conditioned branch at Toa Payoh Central. In June 1972, the bank established separate savings bank counters at 21 post offices to give customers prompt, efficient and personalised services. Specially trained POSB girls wearing golden-coloured jackets were assigned to run these new counters. POSB started computerising its manual accounting system in October 1972. With this raft of upgraded services, the bank achieved stellar results. By the end of 1972, POSB had over 600,000 depositors. Deposits doubled from S$57.7 million in 1969 to S$125 million in 1972.23

The bank continued its computerisation drive with the installation of online banking terminals at various branches in 1974. It started the POSB Giro Service, which enabled customers to settle their utilities bills through automatic deductions from their POSB accounts. A Save-As-You-Earn (SAYE) Scheme that offered bonus interest rates was introduced to encourage wage earners to save regularly. A subsidiary company, Credit POSB, was also incorporated to encourage home ownership. Its home ownership scheme offered housing loans at good interest rates and longer repayment periods. POSB grew strongly. By the end of 1974, the bank had more than 800,000 savings accounts with deposits totalling S$296.4 million.24 By then, POSB had become a leading financial institution for mobilising Singapore’s domestic savings. Consequently, the government decided that it was more appropriate for the bank to come under the Ministry of Finance rather than the Ministry of Communications.25

Becoming part of DBS
In July 1998, the government announced that the Development Bank of Singapore (DBS) would acquire POSB and its various subsidiaries, including Credit POSB, for S$1.6 billion.26 Minister for Finance Dr Richard Hu Tsu Tau explained to Parliament that the merger would enable POSB to compete better with full-fledged commercial banks as well as better serve more sophisticated customers. The sale was officially sanctioned by Parliament with the passing of the Post Office Savings Bank of Singapore (Transfer of Undertakings and Dissolution) Bill on 12 October 1998.27 Today, while POSB still maintains its distinct identity, it operates as part of DBS.28




Authors

Nurhidayahti Miharja & Lim Tin Seng



References
1. Consulton Research Bureau. (1977). The first hundred years of the Post Office Savings Bank of Singapore. Singapore: The Post Office Savings Bank, pp. 10–11. (Call no.: RSING 332.22095957 CON)
2. Consulton Research Bureau. (1977). The first hundred years of the Post Office Savings Bank of Singapore. Singapore: The Post Office Savings Bank, p. 16. (Call no.: RSING 332.22095957 CON)
3. Singapore. Parliament. Parliamentary Debates: Official Report. (1971, October 19). Second and Third Readings of the Post Office Savings Bank of Singapore Bill (Vol. 31). Singapore: [s.n.], cols. 342–346. (Call no.: RSING 328.5957 SIN)
4. Lim, R. (1997). Banking on a virtue: POSBank. 1972–1997, celebrating 25 years. Singapore: POSBank, p. 50. (Call no.: RSING 332.22095957 LIM)
5. Tan, L. E. (1998, July 25). DBS Bank, POSBank to merge. The Straits Times, p. 1. Retrieved from NewspaperSG.
6. The postmaster-general’s report for 1877. (1878, June 8). The Straits Times, p. 1. Retrieved from NewspaperSG.
7. Consulton Research Bureau. (1977). The first hundred years of the Post Office Savings Bank of Singapore. Singapore: The Post Office Savings Bank, p. 11. (Call no.: RSING 332.22095957 CON)
8. Consulton Research Bureau. (1977). The first hundred years of the Post Office Savings Bank of Singapore. Singapore: The Post Office Savings Bank, pp. 11–12. (Call no.: RSING 332.22095957 CON)
9. Singapore. Supplement to the Laws of the Colony of Singapore. (1949). Post Office Savings Bank Ordinance, 1948 (Ord. 38 of 1948). Singapore: [s.n.], pp. 258–266. (Call no.: RCLOS 348.5957 SSLCS–[HWE])
10. Annual report of the Singapore Post Office Savings Bank, 1966. (1968). Singapore: Govt. Printer, p. 1. (Call no.: RCLOS 332.22 SIN)
11. Consulton Research Bureau. (1977). The first hundred years of the Post Office Savings Bank of Singapore. Singapore: The Post Office Savings Bank, p. 16. (Call no.: RSING 332.22095957 CON)
12. Goh, K. S. (1977). The practice of economic growth. Singapore: Federal Publications, pp. 8–11. (Call no.: RSING 330.95957 GOH)
13. Consulton Research Bureau. (1977). The first hundred years of the Post Office Savings Bank of Singapore. Singapore: The Post Office Savings Bank, p. 20. (Call no.: RSING 332.22095957 CON); Annual report of the Singapore Post Office Savings Bank, 1966. (1968). Singapore: Govt. Printer, p. 3. (Call no.: RCLOS 332.22 SIN)
14. Annual report of the Singapore Post Office Savings Bank, 1966. (1968). Singapore: Govt. Printer, p. 3. (Call no.: RCLOS 332.22 SIN)
15. Annual report of the Singapore Post Office Savings Bank, 1966. (1968). Singapore: Govt. Printer, p. 4. (Call no.: RCLOS 332.22 SIN)
16. Annual report of the Singapore Post Office Savings Bank, 1969. (1971). Singapore: Govt. Printer, p. 1. (Call no.: RCLOS 332.22 SIN)
17. Corporation to run the Postal Savings Bank. (1970, September 20). The Straits Times, p. 8. Retrieved from NewspaperSG.
18. Singapore. Parliament. Parliamentary Debates: Official Report. (1971, July 30). First Reading of the Post Office Savings Bank of Singapore Bill (Vol. 31). Singapore: [s.n.], col. 57). (Call no.: RSING 328.5957 SIN); Singapore. Parliament. Parliamentary Debates: Official Report. (1971, October 19). Second and Third Readings of the Post Office Savings Bank of Singapore Bill (Vol. 31) Singapore: [s.n.], cols. 342–346. (Call no.: RSING 328.5957 SIN)
19. Singapore. Supplement to the Statutes of the Republic of Singapore. (1972). Post Office Savings Bank of Singapore Act 1971 (No. 13 of 1971). Singapore: [s.n.], pp. 79–97. (Call no.: RCLOS 348.5957 SIN)
20. Republic of Singapore. Government Gazette. Subsidiary Legislation Supplement. (1971, December 10). The Post Office Savings Bank of Singapore Act, 1971 (S 311/1971). Singapore: [s.n.], pp. 1054–1055. (Call no.: RSING 348.5957 SGGSLS)
21. Annual report of the Singapore Post Office Savings Bank, 1972. (1973). Singapore: Govt. Printer, p. 3. (Call no.: RCLOS 332.22 SIN)
22. Postal bank adopts new logo. (1972, April 14). The Straits Times, p. 10. Retrieved from NewspaperSG.
23. Annual report of the Singapore Post Office Savings Bank, 1972. (1973). Singapore: Govt. Printer, pp. 1–9. (Call no.: RCLOS 332.22 SIN)
24. Annual report of the Singapore Post Office Savings Bank, 1974. (1975). Singapore: Govt. Printer, pp. 2–9. (Call no.: RCLOS 332.22 SIN)
25. Lim, R. (1997). Banking on a virtue: POSBank. 1972–1997, celebrating 25 years. Singapore: POSBank, p. 34. (Call no.: RSING 332.22095957 LIM)
26. Tan, L. E. (1998, July 25). DBS Bank, POSBank to merge. The Straits Times, p. 1. Retrieved from NewspaperSG.
27. Singapore. Parliament. Parliamentary Debates: Official Report. (1998, October 12). Second and Third Readings of the Post Office Savings Bank of Singapore (Transfer of Undertakings) and Dissolution Bill (Vol. 69). Singapore: [s.n.], cols 1024–1056. (Call no.: RSING 328.5957 SIN)
28. Development Bank of Singapore. (2011, March 29). About Us. Retrieved from http://www.dbs.com/dbsgroup/about/default.aspx



Further resources

Annual report of the Singapore Post Office Savings Bank, 1966. (1968). Singapore: Govt. Printer.
(Call no.: RCLOS 332.22 SIN)

Annual report of the Singapore Post Office Savings Bank, 1968. (1971). Singapore: Govt. Printer.
(Call no.: RCLOS 332.22 SIN)

Annual report of the Singapore Post Office Savings Bank, 1969.
(1972). Singapore: Govt. Printer.
(Call no.: RCLOS 332.22 SIN)

Annual report of the Singapore Post Office Savings Bank, 1972. (1973). Singapore: Govt. Printer.
(Call no.: RCLOS 332.22 SIN)

Annual report of the Singapore Post Office Savings Bank, 1974. (1975). Singapore: Govt. Printer.
(Call no.: RCLOS 332.22 SIN)

Consulton Research Bureau. (1977). The first hundred years of the Post Office Savings Bank of Singapore. Singapore: The Post Office Savings Bank.
(Call no.: RSING 332.22095957 CON)

Corporation to run the Postal Savings Bank. (1970, September 20). The Straits Times, p. 8. Retrieved from NewspaperSG.

Development Bank of Singapore. (2011, March 29). About Us. Retrieved from http://www.dbs.com/dbsgroup/about/default.aspx

General Post Office. (1878, June 8). The Straits Times, p. 1. Retrieved from NewspaperSG.

Goh, K. S. (1977). The practice of economic growth. Singapore: Federal Publications.
(Call no.: RSING 330.95957 GOH)


Government savings drive: Now no-limit accounts. (1968, August 27). The Straits Times, p. 4. Retrieved from NewspaperSG.

Improved facilities for POSB depositors. (1972, November 12). The Straits Times, p. 22. Retrieved from NewspaperSG.

Legislative Council. (1876, September 27). The Straits Observer (Singapore), p. 3. Retrieved from NewspaperSG.

Lim, R. (1997). Banking on a virtue: POSBank. 1972–1997, celebrating 25 years. Singapore: POSBank.
(Call no.: RSING 332.22095957 LIM)

New postal savings bank at GPO. (1971, June 11). The Straits Times, p. 17. Retrieved from NewspaperSG.

New-look postal savings bank. (1971, August 4). The Straits Times, p. 1. Retrieved from NewspaperSG.

Ng, E. (1972, June 1). Golden girls behind savings counters. The Straits Times, p. 9. Retrieved from NewspaperSG.

People’s bank stays relevant 25 years on. (1997, July 8). The Straits Times, p. 2. Retrieved from NewspaperSG.

P. O. Savings Bank now independent. (1966, July 15). The Straits Times, p. 5. Retrieved from NewspaperSG.

POSB began 96 years ago with $19,000. (1973, March 23). The Straits Times, p. 23. Retrieved from NewspaperSG.

POSB celebrates its 100th year. (1977, July 18). The Straits Times, p. 7. Retrieved from NewspaperSG.

Postal bank adopts new logo. (1972, April 14). The Straits Times, p. 10. Retrieved from NewspaperSG.

Report on the Singapore Post Office Saving Bank for the Year 1955. (1956). Singapore: Govt. Printer.
(Call no.: RCLOS 332.22 SIN)

Republic of Singapore. Government Gazette. Subsidiary Legislation Supplement. (1971, December 10). The Post Office Savings Bank of Singapore Act, 1971 (S 311/1971). Singapore: [s.n.].
(Call no.: RSING 348.5957 SGGSLS)

Rules for Straits Settlement Savings Bank. (1876, December 9). The Straits Times, p. 3. Retrieved from NewspaperSG.

Savings Bank Act signed by Sheares. (1971, November 22). The Straits Times, p. 19. Retrieved from NewspaperSG.

Savings Bank board chief. (1971, December 13). The Straits Times, p. 9. Retrieved from NewspaperSG.

Savings Bank boss named. (1971, November 23). The Straits Times, p. 9. Retrieved from NewspaperSG.

Savings Bank should move with the times. (1971, October 11). The Straits Times, p. 12. Retrieved from NewspaperSG.

Savings will produce more. (1948, November 7). The Straits Times, p. 5. Retrieved from NewspaperSG.

Singapore. Supplement to the Laws of the Colony of Singapore. (1949). Post Office Savings Bank Ordinance, 1948 (Ord. 38 of 1948). Singapore: [s.n.], pp. 258–266.
(Call no.: RCLOS 348.5957 SSLCS–[HWE])

Singapore. Supplement to the Statutes of the Republic of Singapore. (1972). Post Office Savings Bank of Singapore Act 1971 (No. 13 of 1971). Singapore: [s.n.].
(Call no.: RCLOS 348.5957 SIN)

Singapore. Parliament. Parliamentary Debates: Official Report. (1971, July 30). First Reading of the Post Office Savings Bank of Singapore Bill (Vol. 31). Singapore: [s.n.].
(Call no.: RSING 328.5957 SIN)

Singapore. Parliament. Parliamentary Debates: Official Report. (1971, October 19). Second and Third Readings of the Post Office Savings Bank of Singapore Bill (Vol. 31). Singapore: [s.n.].
(Call no.: RSING 328.5957 SIN)

Singapore. Parliament. Parliamentary Debates: Official Report. (1998, October 12). Second and Third Readings of the Post Office Savings Bank of Singapore (Transfer of Undertakings) and Dissolution Bill (Vol. 69). Singapore: [s.n.].
(Call no.: RSING 328.5957 SIN)

Speeding up PO Bank by computer. (1972, September 18). The Straits Times, p. 7. Retrieved from NewspaperSG.

Straits Settlements. (1875, May 22). The Straits Times, p. 3. Retrieved from NewspaperSG database.

Tan, L. E. (1998, July 25). DBS Bank, POSBank to mergeThe Straits Times, p. 1. Retrieved from NewspaperSG.

The postmaster-general’s report. (1874, August 8). The Straits Times, p. 5. Retrieved  from NewspaperSG.

The postmaster-general’s report for 1877. (1878, June 8). The Straits Times, p. 1. Retrieved from NewspaperSG.

The Savings Bank. (1878, September 7). The Straits Times, p. 1. Retrieved from NewspaperSG.

Tuminah Sapawi. (1998, February 21). The eight ages of the POSBank girl. The Straits Times, p. 1. Retrieved from NewspaperSG.

Tuminah Sapawi. (1998, February 21). Who’s that girl? POSBank spends $250,000 for new look. The Straits Times, p. 4. Retrieved from NewspaperSG.



The information in this article is valid as at 11 September 2013 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

Subject
Banking industry
Banking and finance
Statutory boards
Organisations