OPEN APP
Home / Industry / Banking /  Core banking at post offices to allow interoperability with banks
Listen to this article

MUMBAI : The government plans to bring the entire post office network under core banking system in 2022, allowing easier transfer of funds and interoperability with the banking network.

“In 2022, 100% of 1.5 lakh post offices will come on the core banking system enabling financial inclusion and access to accounts through net banking, mobile banking, ATMs, and also provide online transfer of funds between post office accounts and bank accounts," finance minister Nirmala Sitharaman said on Tuesday, adding that the move would especially benefit farmers and senior citizens in rural areas.

According to India Post’s 2020-21 annual report, core banking solution is part of the information technology modernization project of the department. As on 31 December 2020, 23,477 post offices have access to the core banking system (CBS) Platform. Citing a senior official, news agency PTI had reported in December 2020 that India Post expects to make the post office savings bank interoperable with other bank accounts by April 2021 and will focus on enhancing digitisation of all services in 2021.

“India Post serves more than 50 crore post office savings bank customers through 1.5 lakh post offices across the country. Currently, it offers services through the India Post Payments Bank," said Adhil Shetty, chief executive of financial services marketplace BankBazaar.com.

Shetty said the move to bring all post offices under core banking would allow interoperability between bank and post office accounts.

“For instance, you will now be able to transfer money online to your post office account as well as access these accounts through net banking. While several post offices that had migrated to the CBS are currently offering these services, the interoperability between post offices will increase significantly once all of them are on board," he added.

Experts also believe that bringing all post offices under the ambit of core banking would also allow their depositors to access to bank infrastructure like ATMs.

“At present, post office deposits (allows) limited transfer of funds within post office ecosystem as the same was not connected to banking ecosystem. More than 35 crore post office deposit accounts with deposit aggregating to more than 10 trillion to be connected to core banking system," said Sanjay Doshi, partner and head, (financial services advisory) at KPMG India.

Doshi said that being part of core banking will result in ease of managing funds including transferring funds from post office savings to bank accounts and vice versa. It is a win-win situation, he said, allowing access for banks to post office accounts and deposit holders; and the ease of access to banking customers is an opportunity for post office savings schemes to tap deposits.

Sitharaman also proposed setting up up 75 digital banking units in 75 districts of the country by scheduled commercial banks. According to Murali Nair, president of banking at Zeta, the budget will provide an impetus to the digital payments space with increased adoption of digital payments through the setting up of 75 digital banking units in 75 districts of the country, which will, in turn, facilitate financial inclusion.

“The move to connect 1.5 lakh post offices in India to the core banking system is also a welcome move. This shall enhance the overall banking experience with easy access to post offices through ATMs, mobile, and net banking," said Nair.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Close
Recommended For You
×
Edit Profile
Get alerts on WhatsApp
Set Preferences My ReadsFeedbackRedeem a Gift CardLogout