India Post's ATM plans hit RBI hurdle.
India Post's plan to set up automated teller machines (ATMs) in its post offices may fail to impress the banking regulator.
India Post is in talks with the Reserve Bank of India (RBI) to set up ATMs. However, since according to norms, only banks are allowed to set up ATMs, the central bank is not in favour of allowing India Post to set up ATMs. According to sources in the banking industry, if India Post set up ATMs, they should fall under the RBI's purview for regulation purposes.
India Post has proposed to set up a subsidiary, Post Bank of India, for providing banking facilities. It has also identified nearly 1,000 post offices, out of its 1.5 lakh post offices, where the ATMs would be initially set up.
The sources said though RBI is uncomfortable with the idea of India Post setting up ATMs, it is yet to formally communicate its apprehensions to the department of post.
To increase efficiency and profitability, the department of post had planned to introduce banking solutions and set up ATMs and debit cards for its customers. It also plans to introduce core banking solution by 2012, and has initiated the process of modernising information technology (IT) during the current financial year. The cost of the IT modernisation project is estimated at around Rs 2,000 crore, which includes an integrated, modular software solution, covering postal operations, banking and insurance services.
The department of post also has plans to tie up with banks to help its customers use their India Post debit cards at ATM machines. It has also submitted a plan to the finance ministry for approval. The department aims to offer banking services through India Post in unbanked rural areas that lack formal financing facilities.
India Post already offers financial services, including post office savings schemes, postal life insurance, pension payments and money transfer services
Source : Business Standard, October 14, 2011
