K. Ram Kumar
Mumbai, June 20 Banks had better be prepared for some serious competition from a formidable ‘non-bank’ rival. The good old Department of Posts, also called India Post, which has an on-the-ground presence at 1,55,000 locations across the country, is taking baby steps to invade their turf by establishing ATMs. To begin with, the Department plans to provide the convenience of on-site ATMs to its savings bank (SB) account holders at select Head Post Offices across various States. This move will save post office (PO) SB account holders, including pensioners, the bother of standing in long queues for withdrawing/ depositing money, making routine enquiries regarding outstanding balance, request for a cheque-book, transfer money to another PO SB account, etc. Further, once the Department completes its ambitious networking exercise, SB account holders could walk into any ATM attached to a PO to access their accounts. At a later stage, the Department may also consider linking up its ATMs with the National Financial Switch to which all banks’ ATMs are hooked up.
While ATMs may be passé in the case of banks, for the 150-year old Department of Posts, which embarked on computerisation not too long ago, it is a giant leap in providing value addition to its customers. Clearly, the Department has woken up to the fact that the only way to retain its existing customers and attract new ones is to embrace the information technology paradigm of the 21st century. As on March-end 2009, the Department of Posts had 22.89 crore savings bank accounts and the aggregate outstanding amount in these accounts was Rs 22,217 crore.
A PO SB account (individual/joint and group) currently earns 3.5 per cent interest. The minimum balance to be maintained in an SB account is Rs 50 for a non-cheque account and Rs 500 for a cheque account. The maximum balance in the case of an individual account is Rs 1 lakh and Rs 2 lakh for joint account. There is no limit on group/institutional or official capacity accounts. Interest earned is completely tax free under section 10 of Income Tax Act.
“As part of the information technology revamp of our department, we will be gradually moving the operations of our extensive network of post offices on to a core banking platform. With the Post Office emerging as a focal point for the delivery of all social security schemes such as National Rural Employment Guarantee Scheme and Old Age Pension, establishing ATMs at select head post offices will follow as a natural corollary,” said Mr M.S. Bali, Chief Postmaster General (Maharashtra & Goa).
Besides providing a comprehensive gamut of financial services including postal savings, sourcing small loans for banks, selling insurance products, etc, Mr Bali said his Department can help other financial services providers sell their products and services through the vast postal network.
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