Public banks fare better than private in usage of PoS machines

As private banks have gone on establishing point of sale (PoS) systems at a rate way higher than PSBs(Public Sector Banks), their efficiency in the same has taken a severe hit.

A DH analysis of data on PoS systems and transactions (both in volume as well as value terms) shows that with 66 transactions per month per PoS, private banks’ efficiency is just one-third of public sector banks (PSBs) in terms of volume. Public-lenders, on their part, are seeing above 187 transactions per PoS per month, as per the latest RBI data available for March.

The efficiency of private lenders is also 36% lower than the banking average when it comes to PoS systems.

The overall banking system witnessed 103 transactions per PoS in the month of March.

With the pandemic gripping India in March, the overall PoS transactions came down by 15%, the efficiency trend remained the same in February. Private lenders saw 79 transactions per PoS per month, while PSBs saw 215 transactions and overall banking system witnessed 121 transactions.

In value terms, private lenders have efficiency which is half of public lenders and 24% lower than the banking average. The private banks saw Rs 1.5 lakh worth of transactions per PoS per month in March, compared with Rs 2.8 lakh of PSBs and Rs 1.9 lakh of overall banking average.

A major drag down to private banks is caused by RBL Bank. The bank, which is smaller than HDFC Bank and SBI, has 13 lakh PoS machines -- making up 25.5% of the industry. To put it in perspective, the largest private lender -- HDFC Bank -- has a balance sheet 18 times as big as the RBL Bank, but has 33% lower PoS machines than RBL Bank.

The bigger anomaly here is there have been only 6 transactions worth Rs 20,000 per PoS per month at the RBL Bank-- the least efficient number among the private banks and 90% lower efficiency than the industry average.

Despite repeated attempts, RBL Bank didn’t respond to the query sent by DH.

RBL Bank isn’t alone here: of the 19 domestic private banks, six other domestic private banks -- Axis Bank, Bandhan Bank, DCB Bank, IndusInd Bank, Lakshmi Vilas Bank and YES Bank -- have lesser transactions per PoS per month than the banking average.

The banking industry sources say that it is seen as an “easy money-making model” through merchant transaction fees, in the case of the PSBs, it was only Corporation Bank (now merged) that had lesser efficiency than the industry average.There are 51.4 lakh PoS systems across the country -- 35.6 lakh by domestic private banks and 13.7 lakh by PSBs.