Electronic Fund Transfer

India Post has recently embarked on an ambitious programme of introducing Electronic Fund  Transfers (EFT) in partnership with reputed Banks. EFT implies the transfer of funds across geographical locations, through electronic messaging systems. EFT substitutes paper based process, increases the speed and reliability of transfers, helps better information processing and provides the customers with an increased certainty of payment date while reducing per transaction costs for transfer of funds.

The Department’s existing dedicated countrywide V-SAT Network provides it with ready capability to provide this service. It allows the Department to combine its formidable physical reach with thelatest in terms of technological banking. Recently India Post has started a pilot project with UTI Bank for local  cheque clearance, high value fund transfers and warrant payments.

This is the collection and clearance of cheques drawn or endorsed in favour of partner bank followed by electronic transfer and pooling of all such funds at one central location. It involves presentation of cheques drawn or endorsed in favour of the partner bank to designated Post offices at different stations, which are members of the clearinghouse. The Post Office after getting the individual cheques cleared transmits a remittance advice for the consolidated cleared amount to the destination point (say, Mumbai GPO). The destination post office prepares a cheque for the total amount received from all such locations across the country and hands this over to the authorized representative of the partner Bank.

Presently, the post office is transferring such funds by Day Two by 1100 hrs (where Day Zero is the day of receipt of the cheques). Thereafter the cheque is put into high value clearance by the partner Bank and their account is credited by evening of Day Two.

Salient features of the scheme are as under:

1. Acceptance of cheques by the designated Post office on behalf of UTI Bank.

2. Clearance of the cheque through the local clearing house.

3. Communication of transfer of the amount realised on clearance of cheques by the designated Post  Office through Satellite mail.

4. Issue of an account payee cheque by the destination Post Office in favour of UTI Bank  for the  amount received on transfer.

This involves transfer of funds between two branches of a client bank. The remitting bank branch presents a cheque drawn in favour of Department of Posts to the post office, this cheque is got cleared and the remittance advise is transmitted electronically to the destination post office. The destination post office thereafter makes out a cheque to the borrowing bank branch for the amount received from the originating point.

Presently these funds are being transmitted and a cheque handed over to the partner Bank on Day One by 1100 hrs (where Day Zero is the day of receipt of the cheques).

This is a facility of payment of dividends and other such incomes through the Post Office. Under this service the warrants are printed jointly by India Post and the partner Bank and are payable at par at specified post office locations. The total amount required to accept all such joint warrants is paid by the partner Bank in advance to the Nodal Post Office. Simultaneously detailed information regarding the warrants to be paid out at different payout locations is supplied to the Nodal Post Office in soft and hard copy. This detailed information regarding the warrants is transferred through the departmental V-SAT system to the payout Post Offices for reference against warrants presented through clearing to these post offices. The payout post office also collects the physical warrants on a weekly basis and posts them back to the Nodal Post Office for reconciliation purposes.

1.  Printing of warrants. Thereafter the partner Bank posts these warrants to individual payees who in turn  present the warrants in clearance through their banks.

2.  Simultaneously, the Nodal Post Office accepts a cheque for the consolidated amount and detailed  information (MIS) on the warrants from the partner Bank.

3.  Clearance of the cheque through the local clearing house.

4.  The cleared amount is placed in an institutional no interest account opened in the name of the partner bank at the Nodal Post Office. As and when warrants are accepted and payments made at the payout  Post Offices, the amount in the account is correspondingly reduced.

5.  Communication of the MIS and remittance advice by the Nodal Post Office to the designated payout  Post Offices through Satellite mail.

6.  Confirmation by Post of the electronic MIS and remittance advice.

7.  When warrants are presented in clearing against the Post office, the payout Post Office checks the warrant against the MIS received and if found correct makes payment through the clearinghouse.

8.  Accepted warrants are collected and posted back to the Nodal Post Office for reconciliation purposes.