India Post has extensive outreach in rural areas of Jharkhand with 13 Head Post Offices (HPOs), 454 Sub Post Offices (SPOs) and 2,643 Branch Post Office (BPOs). With 3,097 (454 SPOs + 2,643 BPOs) outlets present in rural and semi-urban areas, India Post has a reach of at least one outlet for every two of the state’s 4,423 gram panchayats.
India Post plays a major role in disbursement of G2P payments in Jharkhand, especially for MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme). During the financial year 2015-16, out of a total of Rs. 89,364 lakh (USD 135.40 million) disbursed in MGNREGS, approximately 70% of the amount i.e. Rs. 61,905 lakh (USD 93.70 million) was disbursed through India Post. To facilitate payment of such large amounts, India Post has developed technology-enabled systems for payment processing, transfer to beneficiary accounts, and withdrawal by beneficiaries, all of which were earlier on manual systems. This blog discusses the manual-to-electronic transition and improvements at India Post in Jharkhand circle; and the benefits it has brought.
In the earlier system, payment orders were prepared manually at each panchayat from where these were forwarded to India Post for manual processing and transfer of the payment to beneficiary accounts. Beneficiary authentication, at the time of withdrawal and payment to beneficiary, were also done manually because the account details were maintained by the post office concerned in a manual ledger. This system was inefficient, as it led to monetary leakages and payment to ghost beneficiaries, in addition to the inevitable delay in payments.
To address these issues, the Ministry of Rural Development (MoRD) developed the e-FMS (Electronic Fund Management System). e-FMS serves as an MIS for MGNREGS payments and enables electronic generation of Fund Transfer Order (FTO – i.e., electronic payment order), once work details of individual beneficiaries are entered in the e-FMS at block office. It also enables online transfer of FTO from block office to either a bank or to India Post for payment processing. Further, to synchronise with e-FMS and to reduce manual steps in processing of payment order, India Post enabled electronic processing of FTO in Jharkhand. The payment processing steps are given below:
1. CEPT Mysore receives FTOs from MGNREGS block office
2. CEPT sends FTOs to respective HPOs
3. HPOs credit beneficiary accounts
4. HPOs send processed list (i.e., details of credited beneficiary accounts) to CEPT Mysore
5. CEPT Mysore sends processed list to respective SPOs
6. SPOs credit beneficiary accounts (HPOs, SPOs and BPOs are not interconnected, so they manage different databases for customers. HPOs, SPOs and BPOs update their respective customer data bases separately. For this reason, FTOs are routed through all the offices.)
7. SPOs send hard copies of processed list to BPOs
8. BPOs credit beneficiary accounts in a manual ledger.
Even after these changes were effected, transfer of payments to beneficiary accounts took a minimum of 7-8 days from the first step of generating an FTO and sending it from block office to India Post to the eventual credit into the beneficiary account.
To address the delay in processing of FTO and crediting beneficiary accounts, India Post has rolled out “India Post AEPS” (Aadhaar-Enabled Payment System). In this system, SPO and BPOs are enabled with online front-end devices (tabs, point of sale, and desktops) to carry out beneficiary transactions.
 Centre for Excellence in Postal Technology (CEPT) Mysore manages back end technology aspects of India Post.
 Since the time of this study, India Post has adopted a Core Banking Software (CBS) and will be able to update accounts at all levels simultaneously.
 State/India Post utilises SRDH (State Resident Data Hub) database, which is a state-specific copy of Aadhaar database. Payment to beneficiaries is done through Aadhaar-based biometric authentication.
 The standard operating procedure permits Rs. 5,000 as cash holding per BPO. But the limit given does not suffice for the volume of business at the BPOs. Hence, SPO, at its discretion, provides the BPOs with cash over and above to the stipulated limit.