Opening branches

India Post bank to miss September date for branch opening

The India Post Payments Bank (IPPB) certainly won’t miss the September deadline it set for itself to open 650 branches across the country. India Post, the country’s government-run postal system, failed to recruit a System Integrator (SI) on time, causing its bank payments schedule to shake up.

The Department of Posts, one of 11 entities to receive approval in principle from the Reserve Bank of India (RBI) in 2015 for bank payments, launched a pilot service in Raipur and Ranchi in January. Although armed with a banking license, the department couldn’t go beyond a pilot, as it struggled to find a company to meet its technology infrastructure needs. It was only recently that India Post awarded the system integrator contract to US tech giant HP.

“We really had problems fixing the system integrator,” said Post Secretary Anant Narayan Nanda. Commercial standard. According to the RBI’s mandate, the payment bank is to operate primarily digitally. “SI, which will integrate all the features, has to be there first and we haven’t been able to fix it,” he said.

When the department first issued a Request for Proposal (RFP) last September to select an IS, only one company applied, causing the offer to fail. When the call for tenders was reissued in October, around 28 companies attended the pre-tender conference, raising everyone’s hope. Finally, two companies – HP and FIS (Fidelity) – sent their offers.

HP was awarded the contract last month.

It was not a lack of interest, as many companies attended the pre-tender conference and asked for details on the project.

According to Nanda, few companies had the capacity to execute such a large and complex project in a short period of time.

The IS mandate was to take care of the end-to-end technical solution for the payment bank. The architecture was difficult to put in place in a short time, he added.

Another official explained that the IS will have to integrate all the functions of the bank as well as the operations of about 30 suppliers in a single system.

HP, which won the tender, has around 30 suppliers that will be integrated into a single system. Despite the delay in launching the service, Nanda disagreed that India Post had lost the first mover advantage (Bharti Airtel and Paytm had already launched their banks). The India Post Payments Bank model is very different because they are broader in scope, he said. India Post has 155,000 post offices across the country, with a presence in most rural areas.

“We have the connection to the base… just because someone has a phone number and that phone number is converted to an account doesn’t mean deposit, withdrawal and third party offers…. So there are a lot of things where connection is most important, that’s what we have and that’s our business model, ”Nanda said.

In fact, thousands of dak sevaks and letter carriers will be given portable devices with which they will visit potential customers for banking. “It’s as if the bank goes to every home,” said one official.

Bumpy road

  • 2015: Post Ministry obtains approval in principle from Reserve Bank of India to create payment bank
  • June 2016: Cabinet approves the proposal to establish the Indian Postal Payment Bank (IPPB). Corpus: Rs 800 crore
  • January 2017: The Minister of Communications, Manoj Sinha, launches IPPB as a pilot in Raipur and Ranchi. It has been announced that 650 branches will be established by September

System integrator problem

  • Sept 2016: a call for tenders was launched to select a system integrator that would integrate all IPPB functionalities. But only one offer made
  • Oct: another call for tenders launched; two companies – HP, FIS (Fidelity) – submission
  • Jul 2017: HP seen the contract

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