North Block wants banks' connectivity 24/7

DoT asked to improve connectivity, especially in rural hinterland

The finance ministry has intervened on behalf of public sector banks to ensure 24-hour connectivity of their branches.

The Department of Telecommunications (DoT) has been asked to improve the communication connectivity especially in the rural hinterland, where banks complain of poor customer service as a result.

The move follows a meeting of public sector bankers with the finance minister in June 2005.

The DoT has asked Mahanagar Telephone Nigam (MTNL) and Bharat Sanchar Nigam Limited (BSNL) to address the issue at the earliest. Senior officials of the two public sector telecom companies will shortly make a presentation to public sector banks on how they plan to upgrade their infrastructure.

Even as public sector banks are pushing to connect majority of their branches on the core banking platform, last-mile connectivity proves to be a crucial barrier especially when it comes to rural branches.

The Indian Banks' Association (IBA) studied the problems faced by PSU banks and submitted a report to the finance ministry.

"Connectivity is a problem for public sector banks as majority of their branches are in the rural areas," said a senior IBA official. Unlike private sector banks they cannot afford to invest in alternative technologies like VSAT and wireless technology, he added.

MTNL operates in the Mumbai and Delhi and BSNL operates in rest of the country. "Most public sector banks depend on BSNL for their lease line and landline connectivity in interior centres," said the chairman of a public sector bank.

Owing to bad infrastructure most of the time the landline as well as lease lines are down which affects business, he added.

With no competition from private telecom players in rural India, public sector banks are forced to take lease lines and land line connections from public sector telecom companies, said a chief technology officer of a public sector bank.