Investors’ stampede causes CBS crash, forces India Post to go offline for now

Relief is at hand for investors who rushed to post offices to park their money before lower interest rates kick in from April 1, only to find their plans hampered by the crash of the core banking system (CBS) in some cities.

Beginning Monday, the Department of Posts has begun to accept both deposits and withdrawals offline, wherever the CBS turns sluggish owing to high-volume transactions, India Post Deputy Director-General (Financial Services) LN Sharma told BusinessLine .

To deal with the higher volume, it has also suspended the migration of the remaining 4,900 (of the 25,000 post offices in the country) to Infosys’ Finacle software from Sanchay.

The crossover was to be completed by March 31, but that will now be pushed back to May 1, he said.

Confirming the rush for postal schemes after the rate cut announcement, and the “slowdown” in the system because of the volume of transactions, Sharma said, “The business continuity plan for opening accounts, withdrawal and agents’ deposit will be available offline.”

Currently around ₹6.5 lakh crore is invested in approximately 70 lakh accounts across several postal schemes. “Of this, 28 crore accounts and 27 crore certificates have been migrated to Finacle,” he said.

The performance of India Post’s CBS, adopted as part of an eight-part IT project, has come in for some flak. “The projections for transactions are based on the volume that existed around 2010-11; no wonder it is giving trouble,” said an agent.

Ganesh Sawleshwarkar, Post-Master General, Pune region, however, points to the mammoth scale of operations. “The software has never been tested at this level. This is the single-largest SAP implementation and CBS in the world. Indicatively, SBI’s core banking solution extends to 16,000 branches; we already have over 20,000 post offices using CBS.”

The experience of investors in other cities varied. In Chennai, no software glitches were reported, and when our reporter approached the Tiruvallikenni post office counter, an official said, “Come in the morning to open any savings scheme.” At the main Head Post Office on Anna Salai, an official said there had been no technology-induced delay in opening savings schemes. Post Office savings counters will work an hour beyond normal hours in the Chennai City Region till March 31. Special counters were kept open at key post offices on Sunday, and over 6,200 accounts were opened.

In Kolkata, however, post offices have stopped opening new savings accounts altogether until March 31. Our reporter’s experience at one of the post offices in the Central Business District, where a clerk turned him away and the post master said the system was “not working”, was validated by postal agents’ accounts.

“We are not accepting requests for opening savings account or small savings schemes,” said a clerk. “One of my clients came to invest ₹17 lakh this morning. I had to turn down his request,” said an agent who did not wish to be named.

A post master said on condition on anonymity that “new investments are not being accepted in the CBS ever since the rate cuts were announced. We have received many complaints, and have apprised our seniors about it,” he added.

In Delhi, sources said it was normal for banks to accept deposits offline in times when the CBS crashed, and the same was true of the postal department. However, many bankers privately criticised the decision to announce the small savings rate cut well ahead of the April 1 deadline, since it had prompted a stampeding towards post office schemes.

With inputs from TE Rajasimhan in Chennai, Abhishek Law in Kolkata and KR Srivats in Delhi