Adopt tech for bank a/cs, India Post told

NEW DELHI: An inter-ministerial committee on financial inclusion has recommended structural changes in the operation of postal savings bank (POSB) accounts as it asked the department of posts to create a wider technological platform, a move that will take its low-cost banking services to the rural unbanked population.


To counter heavy infrastructure cost that has often come in way of greater financial reach, the expert committee has asked India Post to enter into arrangements with IT vendors under public-private partnership mode to create a platform wherein it can operate a core banking solution (CBS) platform.

It proposed that the department, with its network of over 1.55 lakh branches, should deliver no-frills accounts and take them to a large section of the population that are not properly covered by banks and financial institutions. Commercial banks that host no-frill accounts on a traditional CBS find it expensive as it involves high fixed costs for software licenses and hardware.

The system for issuing and managing POSB accounts should be modernized by implementing a customised and scalable lightweight technology solution, the committee has suggested, adding that the IT provider may charge a low price per transaction to the department for its services.

"With the transaction costs getting very high for taking financial services to the rural areas, such technological collaboration with institutions which have an embedded infrastructure helps in bringing costs down," said Rana Kapoor, managing director, Yes Bank.

To further the need of greater financial inclusion, the department has been asked to open up its technological interface to micro finance institutions, mutual fund, insurance companies as well as interested telecom operators to reach out to the excluded rural and urban class.

India Post can deploy this infrastructure in elegant ways to become a market leader in micro loans to the poor for emergencies. It will be able to offer much cheaper loans to its customer by harnessing the power of technology and innovative product design.

The Thirteenth Finance Commission has proposed a budget of Rs 3,000 crore to be used for delivering an incentive of Rs 100 into the bank account of each BPL resident who enrols for a UID. "India Post, with its ubiquitous reach should actively position itself to offer a low cost lightweight bank account to anyone enrolling for a UID," the committee said in its report.