India's postal service’s plans to set up ATMs at its post offices to cater to customers with savings accounts reportedly will not secure approval from the Reserve Bank of India, the country’s banking regulator.
India Post in July announced plans to install 1,000 ATMs at various post offices across the country by the end of March next year to cater to its clientele in semi-urban and rural areas (
Unlike postal services in other countries, India Post is a major financial-services provider, especially in rural areas, where it offers insurance, fund-transfers and pension payments.
However, because India’s banking laws allow only banks to deploy ATMs, the central bank does not support allowing India Post to set up ATMs, reports Business Standard. The central bank has yet to formally communicate its apprehension to the Department of Post but is expected to do so soon, the paper reports.
Representatives from the central bank and India Post both declined to comment on the issue to PaymentsSource.
An official at a Mumbai-based private bank who requested anonymity tells PaymentsSource the central bank would be wrong not to let India Post set up ATMs.
“India Post has 150,000 branches all over India. It has access to the remotest parts of India. When you are mandating banks to go deeper into rural India for banking access, why would you block a ready network?” he asks. “Also, when the central bank is letting ATM-services providers set up ATMs for banks and also is considering white-label ATMs, why can India Post not work with these entities to set up ATMs?”
India Post says it holds nearly 230 million savings accounts serviced by nearly 155,000 branches across the country. It plans to set up a subsidiary, Post Bank of India, to provide banking facilities.
The postal service plans to introduce ATMs, debit cards and core banking services by 2012 under an information-technology modernization program estimated to be worth US$410 million (296 million euros), according to the agency.
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