MONEY can now be instantly transferred between post offices in five mainland cities including Beijing and Shanghai following the introduction of the first on-line postal savings clearance system. The Beijing-based postal financial clearance and control system is part of China's national postal banking project. It could eventually be more than double the size of the Japanese postal savings network, which links up about 24,000 post offices,. The network also covers Dalian, Guangzhou and Haikou. When local branches are computerised, postal savings account holders will be able to retrieve money from automatic teller machines through any of the post offices linked to the network. For instance, account holders could draw money from a Shanghai post office at the same time as it is deposited into their postal savings accounts in Beijing. The Ministry of Posts and Telecommunications plans to expand the system to cover another 20 principal cities this year, linking up about 10,000 post offices. According to NTT Data Communication Systems Corp, which pioneered the on-line postal banking system in Japan 20 years ago, mutual access to data between post offices across the country could be achieved by installing additional clearance systems. Japan's postal savings network is the largest of its kind in the world, with one clearance system in Tokyo and another in Osaka. However, the recently introduced postal banking on-line network in China could outpace its Japanese counterpart in the future. Of the 54,000 post offices on the mainland, about 25,000 offer postal savings services and most of these are yet to be computerised. 'The postal savings system fits the [growth] pattern of the developing countries, where an advanced private banking system has not been established,' said the Hong Kong branch general manager of NTT Data, Yoshinori Iida. 'The Government could take the lead to introduce up-to-date technology in the banking sector.' The company was granted the contract to develop the national clearance system in January. Another project - also by NTT DATA - which will link up 100 post offices in Beijing, is expected to be completed by June. Mr Iida said the on-line postal savings network performed all the basic functions of a general banking system, but more efficiently. Data will be transmitted between post offices using cables. However, due to lack of demand, the clearance system had yet to work round the clock, Mr Iida said. The Japanese systems integration giant refused to reveal the actual investment in the Beijing computer network, but said it would not be very different from a similar Unisys-based system for computerising the postal savings service of 110 Shanghai post offices. The latter cost about US$1.6 million. Hongkong Bank China services research manager Benny Chiu said the postal savings system could supplement the mainland's inadequate banking services, rather than being a competitor. Under the postal banking project, post offices are expected to collect idle capital in China's remotest areas which may not have any bank branches.