A pilot project has already been conducted by the Railways and based on the outcome, the Railways is planning to tie-up with these banks mentioned above.

An expression of interest from banks for payment gateways has been passed by the Railways in December 2000. Said sources: "After expression of interest, banks have been invited to make their presentation to railway board officials in December 2000". Sources further added that prominent among the banks shorlisted were HDFC Bank, ICICI Bank, IndusInd Bank and SBI. Indian Railways felt the need to reduce its cash handling at counters and at goods-sheds for freight business and instead increase the use of plastic money and electronic funds transfer both for freight and passenger business.

This exercise requires payment gateways, electronic funds transfer, automated-teller-machines (ATMs) with ticket vending machines and co-branded smart-cards which could be provided only by techno savvy banks.

"Many state-run banks did not respond due to the strict eligibility criteria stipulated in the `expression of interest' of the Railways. It is reliably understood that the Union Government and Ministry of Railways have short-listed the above referred banks for various pilot projects in different areas in the country," the source added.

The eligibility criteria stated in the expression of interests by the Indian Railways are as follows: that the bank should have a large number of branches in India covering large spectrum of all types of cities; it should have a very strong IT, e-commerce and telecommunication infrastructure in the country; it should already possess a payment gateway or must be likely to get approval for a payment gateway within a period of two to three months; and that they should have their ATMs and branches over a large number of cities (more than 30) in the country. The selected banks will have to implement, maintain, support and enhance technology for a minimum period of 10 years; it will interface with Indian Railways existing systems and develop the hardware and software platforms to facilitate the above transactions; also help the Railways to reduce cash handling at the counters, good sheds and parcel offices; and also bring about electronic funds transfer into the appropriate accounts of Indian Railways.