Further, Head Post Office servers remain in sync with a server installed by the state government, which maintains mirror accounts of beneficiaries of government-sponsored schemes. Front-end devices at SPOs and BPOs are connected with the server installed by the state government. Thus, beneficiary accounts can be synced and updated in front-end devices as soon as the FTO is received at the HPO. The revised FTO processing after AEPS enablement is as follows:
1. CEPT Mysore receives FTOs from MGNREGS block office
2. CEPT sends FTOs to respective HPOs
3. HPOs credit beneficiary accounts, i.e., HPO servers are updated
4. HPO servers synchronise beneficiary account data with the state government server
5. State government server synchronises beneficiary account data with front-end devices, which show updated balance in beneficiary accounts at BPOs
1. The inability of bank branches at block level to provide sufficient cash to meet the requirements of SPOs – many bank branches are not able to provide cash of more than Rs. 50,000 (USD 757) in a single day.
2. India Post’s procedures limit the amount of cash that can be transferred from SPOs to BPOs to between Rs. 10,000 (USD 151) and Rs. 20,000 (USD 303) at the discretion of the SPO.
One SPO typically supervises 5-6 BPOs. Moreover, SPOs are not able to meet the cash requirements of BPOs, given the limited availability of cash from block-level branches (as outlined in 1 above).
3. Cash holding of BPOs in Naxal (left wing extremist)-affected regions is limited to Rs. 5,000 (USD 75).
The Department of Information Technology, Government of Jharkhand, commissioned MicroSave to study the existing India Post-AEPS system and cash management practices of India Post for MGNREGS payments in the state and to suggest cash management measures to address the issues. Based on the study, MicroSave recommended the following cash management measures, in addition to transit insurance, to the state government:
1. Availability of Cash: Cash availability could be ensured at SPOs through one of two ways:
a. Alternative 1:
i. Once the FTO is received, the HPO can inform the SPOs under its jurisdiction and sponsor bank branch at district level about the cash requirement at SPOs and block-level branches in the next 2-3 days.
ii. On receiving the information from the HPO, the sponsor bank branch at the district level can inform the block-level branches to arrange for cash.
iii. Thus sponsor bank can ensure the availability of cash at block-level branches when SPO visits the branch to encash the Demand Draft (DD) made by HPO.
b. Alternative 2: Where multiple banks are present, HPO can prepare multiple DDs that can be drawn from more than one bank at the block level. So, if, at present, SPO can withdraw only Rs. 50,000 (USD 757) in a single day from one bank, it can withdraw Rs.100,000 (USD 1,515) from two banks, or Rs.150,000 (USD 2,273) from three banks and so on.
2. Disbursement of Prescheduled Dates: Disbursement to beneficiaries can be organised on pre-scheduled dates by communicating specific dates to beneficiaries. This would help BPOs that have limited cash available with them for disbursement. This would also reduce rush at BPOs, reduce waiting time for beneficiaries and ensure payment on the same day. However, there is security risk of money being looted while in transit from SPO to BPO, if disbursement dates are communicated in advance. If this is managed well, this approach can be very helpful in areas where security risk is low.
With these initiatives, turnaround time (TAT) to credit beneficiary accounts has come down from over 20 days to 3-4 days. India Post has also started CBS implantation in the country to cover all HPOs and SPOs
. India Post will provide front-end devices to BPOs, which will remain connected with the CBS. These initiatives will bring all the offices of India Post on the same platform to further enhance delivery of G2P and other payments. But, even after such initiatives, cash management will remain a concern. With these initiatives, better cash management practices, recent approval to function as Payment Bank
, and the push for Direct Benefit Transfer (DBT)
, India Post has the potential to become one of the key success stories in India’s drive for financial inclusion.
 India Post has three administrative layers at district level, i.e. Head Post Office (HPO) at district, Sub Post Office (SPO) mostly at block, and Branch Post Office (BPO) at panchayat/village level.
 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.