The department of posts (DoP), which has recently acquired a certificate of registration from the Pension Fund Regulatory and Development Authority (PFRDA) as one of the points of presence, is gearing up to offer services under the New Pension System (NPS) by the middle of February.

Officials of the postal department said modalities for formally offering services as a point of presence (PoP) is being worked out. “We are working on modalities to offer our services to under NPS. We hope to have everything in place by middle of February to NPS subscribers,” Manisha Sinha, director (financial services), department of posts, told Financial Chronicle. PoPs act as the interface between subscribers and the NPS.

Sinha said that among the issues that need to be resolved is the compatibility of the technology platform of the post offices that would offer the NPS products. “We are working on our IT set up and its compatibility with the Central Recordkeeping Agency (CRA) of the NPS,” she said.

The National Securities Depository (NSDL) is the sole CRA under the NPS.

Ashok Pal Singh, deputy director general (technology) department of posts, said that the IT compatibility would be implemented soon. “The technology sophistication of postal department is being upgraded to be compatible with the requirement of NPS,” Singh said. The department of posts has decided to offer its services from 800 post offices initially and gradually scale it up. “We will bring in more post offices as we go along. Eventually, we should be able to offer NPS products from all the 12,000 post offices,” Sinha said.

At present, the NPS is being distributed by 21 entities through nearly 800 branches spread all over the country. PFRDA is working with these institutions to bring all their branches under NPS in a time-bound manner. NPS will now be sold through over 1600 outlets of DoP and other entities.

Sinha said that the transaction volumes under NPS are still thin and there would not be significant fee income at the present state of development of the system. “If you ask me whether this is good business, I think it is not so yet. NPS is a volumes game, which is very low. One has to generate awareness and increase access points to bring in more subscribers,” Sinha said. The NPS, which was launched on May 1, 2009, has barely roped in over 3000 subcribers till date.

The postal department had earlier voiced its concern over the low fees of the points of presence. PoPs earn Rs 20 as fees per transaction handled by them. “We did express reservations on the fees which we feel is low. But one of the main reasons for joining the NPS was that is was absolutely necessary to have retail presence like that of the post offices to make NPS a success,” Sinha said.

“We are part of government and we feel it is our duty to support a government initiative,” Singh said.