DoP to seek Cabinet nod for 240 cr to set up Post Bank
April 12, 2015
DoP has plans to set up Post Bank of India under payments bank licence
The Department of Posts (DoP) will soon seek Cabinet approval for Rs 240 crore for setting up Post Bank of India.
The DoP has plans to set up Post Bank of India under payments bank
licence. The Reserve Bank of India has already issued licensing norms
for niche banks -- payments banks and small banks.
The DoP, which has applied for a payments bank licence, has a hybrid
model in mind to operate Post Bank of India. Reserve Bank Governor
Raghuram Rajan yesterday had said while the banking sector is set to
undergo changes in the next few years, "we are going to possibly have
postal bank".
"The Department is in the process of seeking approval for about Rs
240 crore from Expenditure Finance Committee which will then need nod
from Cabinet," an official source told PTI.
As per RBI guidelines, payments banks would offer a limited range of
products such as demand deposits and remittances. They will not be
allowed to undertake lending activities and will be initially be
restricted to holding a maximum balance of Rs 1 lakh per individual
customer.
They will be allowed to issue ATM or debit cards as also other prepaid payment instruments, but not credit cards.
According to a source, Communications and IT Minister Ravi Shankar
Prasad has approved hybrid model suggested by Ernst & Young which
prepared detailed project report on Post Bank of India (PBI).
"E&Y has come out with three models but suggested preference to a
hybrid model. Under which about 600 branches will directly operated by
PBI staff in post office premises and transactions in other parts of the
country will be supported by India post staff," the official said.
Post Bank of India is proposed to have its own employees and IT
infrastructure. The transaction handled by India Post , employees will
be entered in to computer server of PBI.
The Department expects revenue of over Rs 550 crore from PBI in first 5 years.
"India Post will earn from every transaction it will carry out for
PBI and rents that it will get from its branches. India Post financial
services like saving account, postal life insurance will continue as it
is," the official said.
The DoP will evaluate its five year performance as payments bank and
then it will take call of setting up full fledged banking service.
