INDIA POST to introduce Core Banking Solution by 2013

Core Banking Solution (CBS)

IT Modernisation Project

In order to meet the requirements and needs of the IT Modernisation Project, Core Banking Solution (CBS) will be implemented across India covering all the post offices.

Core Banking Solution (CBS) is networking all the post offices, which enables customers to operate their accounts and avail account related services from any post office on CBS network, regardless of where he maintains his account. The customer is no more the customer of a post office. He becomes the Post Office Savings Bank (POSB) Customer. Thus CBS is a step towards enhancing customer convenience through “Anywhere and Anytime Banking”.

Need for Core Banking Solution

Ø Improve operational efficiency - reduce cost of operations

Core Banking will provide various alternative delivery service channels, which reduce cost and time taken for the transactions. Currently banks’ counter transaction costs are around Rs. 45-50 per transaction. On the other hand, the transaction cost of withdrawal from an ATM is Rs. 15-18. For net banking, the cost is Rs. 4 per transaction. The centralised process of core banking will also improve efficiency by avoiding duplication of work in post offices from Branch Office (BO) to Sub Post Office (SO) to Head Post Office (HO).

Ø Improve customer service

Core Banking will improve customer services by providing services through alternate channels on 24 x 7 basis – ATM, Internet, Phone, SMS and Mobile Banking. Customers would be able to operate their accounts, and avail banking services from any post office on CBS network, regardless of where they maintain their account.

Ø Comply with Anti Money Laundering (AML)/ Know Your Customer (KYC) requirements

It is easy to comply with anti–money laundering norms through core banking. The AML norms require the post office to detect when a customer has opened multiple accounts. This is not possible in Sanchay Post. Moreover, compliance with KYC norms is required to issue debit cards to the customers.

Ø Integrate with electronic payment systems

Integration with electronic payment systems will allow Department of Post to participate in an inter-operable electronic payment network run by the National Payments Corporation of India. This will help in quick and safe transfer of funds through National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS).

Ø CBS implementation seeks to meet the following objectives:

· To increase the number of customers

· To provide multiple delivery channels like internet, mobile banking, ATMs, thereby bringing access to financial services to the doorsteps of the customers

· To enable faster money fund transfers to reach out to more customers

· To become one stop solution for financial inclusion initiatives of the Government of India

CBS is a centralized application with browser based interface. So, there is no need for servers at the post office level for running CBS. CBS will have some additional features which are not available in Sanchay Post. These are: real-time 24x7 processing capability, centralized database, availability of alternate channels, capture of KYC (Know Your Customer) details, adequate audit & inspection features etc.

Ø CBS will provide the following benefits:

· Anytime and Anywhere banking

· Standardised, simple and automated processes

· Increase in quality of the service provided to the customers

· Timely and accurate information for management decision making

· Strong audit and internal controls

· Bring down the cost of transaction and thereby improving operational efficiency

· Paving way for new value added services thereby generating additional revenue for the Department