Soon private bank's customers can withdraw money from India Post ATMs

Soon private bank's customers can withdraw money from India Post ATMs

Soon people will be able to withdraw money from any bank account - private or PSU - through ATMs of India Post, as it takes the first step towards the proposed Postal Bank in the next few years. 

Currently, people with accounts in postal department can use the services of the ATM.

India Post, which has already received a license for starting a Payments Bank, will send a proposal to the Reserve Bank of India (RBI) for allowing ATMs of India Post to work on the platforms of all other banks. "We will soon send a proposal for interoperability of its ATMs with other banks. This would mean technology upgradation in our existing ATMs," according to a senior official from the department.

The minister for communications and IT Ravi Shankar Prasad has been taking keen interest in the revival of India Post through various measures. Currently, about 600 ATMs have been installed across the country and target is to take this number to 1000 by March this year and 10,000 in the next couple of years. Also, another 20,000 micro ATMs will be set up in the same period.

"This will promote banking in the rural areas. The plan is to have one ATM each in all the 1.55 lakh post offices, out of which 1.3 are in the rural areas, across the country," the official said.

Public Investment Board has already approved Rs 800 crore proposal from India Post for setting up a payments bank and is now in the process of finalising a consultant for the same. It is expected to start operations by March 2017. Subsequently, the plan is to convert into a full-fledged bank.

In the Budget 2016-17, the government has already announced a massive rollout of ATMs and micro ATMs in post offices over the next three years to provide better access to financial services in rural areas.

As on February, India Post has issued 126,181 ATM-cum-debit cards to its account holders.

Also, about 25,000 post offices have been brought under core banking system, which will allow users to operate their accounts from any post office. As of now, people have to visit their respective post office branch to undertake transactions.

Once core banking system is implemented across all post offices by next year, it will offer users flexibility to visit any branch. The IT modernization project of post offices is underway with an investment of about Rs 5,000 crore. India Post has overtaken the State Bank of India to become India's largest core banking network with 18,231 branches.

Postal department plays a huge role in disbursing wages to Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) beneficiaries. Nearly 6.92 crore MGNREGS accounts have been opened in post offices up to December 2015 and the number of post office savings bank (POSB) accounts has increased from 30.86 crore to 33.97 crore, according to the latest Economic Survey. Because of these reasons, the department of posts is planning to install ATMs so that it can benefit even the lower strata of the society.

As many as 25 commercial banks and institutions including Deutsche Bank, State Bank of India, Punjab National Bank, Axis, Yes Bank and IDBI have evinced interest in partnership with India Posts for their Payments Bank venture. Payments bank will be able to products such as demand deposits and remittances. They will not be allowed to undertake lending activities and will initially be restricted to hold a maximum balance of Rs 1 lakh per customer. However, they will be allowed to issue ATM or debit cards as other prepaid payment instruments, but not credit cards.

Source:BankingUpdates