SBI loses Coal Mines Provident Fund deal to IDBI Bank

IDBI Bank has gained from State Bank of India's (SBI) inability to flawlessly service Coal Mines Provident Fund's (CMPF) pension payments to over 1.25 lakh retired coal miners. It has not only won the contract for distribution of pension to coal miners, it will now also be the banker to CMPF.

IDBI Bank will from February 2005 onwards provide the pension distribution service to CMPF free of cost, thus rendering to CMPF a saving of Rs 1.50 crore annually towards postage expenses charged by SBI.

CMPF has total assets of about Rs 30,000 crore, of which Rs 17,000 crore have been invested in Reserve Bank of India's special deposit scheme.

IDBI Capital Market Services (ICMS) provides investment management services to CMPF. IDBI Bank won the contract in the face of stiff competition from ICICI Bank, HDFC Bank and SBI itself, having convinced Coal Ministry and CMPF officials of its ability to provide a fault-free service to pensioners, the bank's PSU Finance Head, A R Sinha, said.

Rajesh Kumar, Commissioner of CMPF, said the decision to look for another bank stemmed from SBI's inability to offer a satisfactory service.

"We had no option but to shift. SBI would take 1 to 2 months to credit accounts of pensioners even in places like Jalandhar. Apart from postal expenses, SBI would also charge us a small service fee. We will also move all our banking needs from SBI to IDBI Bank's newly-opened Dhanbad branch," he said.

IDBI Bank managing director and CEO G V Nageswara Rao said the bank's technology driven capability to handle large volume processing helped it won the CMPF mandate.

IDBI Bank will encourage pensioners to have their accounts with it wherever it has a branch as this will enable the bank credit money to pensioners' account on the first day of every month.

CMPF has asked IDBI Bank to ensure that pensions are credited in every account latest by the 10th day of every month.