More than 35 crore Post Office deposit accounts with deposits aggregating Rs 10 crore will now be connected to the banking system.
Finance Minister Nirmala Sitharaman announced connecting 1.5 lakh Post Offices to the core banking system in her Union Budget speech on Tuesday.
Sanjay Doshi, Partner and Head, Financial Services Advisory, KPMG in India said this will mean financial inclusion of account holders across 1.5 lakh Post Offices.
At present, the Post Office deposits limited transfer of funds within their ecosystem as the same was not connected to the banking ecosystem.
Doshi said more than 35 crore Post Office deposit accounts with deposits aggregating to more than Rs 10 lakh crore will be connected to the core banking system. Being part of the core banking will result in ease of managing funds, including transferring funds from the Post Office savings to bank accounts and vice versa.
This means access for banks to Post Office accounts and deposit holders, ease of access to banking customers is an opportunity for the Post Office savings schemes to tap the deposits lying with banks. Interoperability will provide banking infrastructure access (for example Bank ATMs) to Post Office customers.