India Post's payment bank gets Cabinet nod

The Centre on Wednesday approved a proposal to set up India Post Payments Bank with a corpus of Rs 800 crore.  The payment bank will begin operations from March 2017 in 50 districts as a public limited company under the Department of Posts. 

“The Cabinet has cleared proposal of postal payments bank. We have 1.54 lakh post offices of which 1.39 lakh are rural post offices. As many as 650 branches of postal payments bank will be established in the country which will be linked to rural post offices,” Telecom Minister Ravi Shankar Prasad told reporters here. 

“Total architecture of postal payments bank is of Rs 800 crore which will have Rs 400 crore equity and Rs 400 crore grant. By September 2017, all 650 branches of postal payments bank will become operational,” said Prasad.

The minister said the payments bank, which will be run by a chief executive officer, will be professionally managed and there will be



 representation from various other government departments, including the Department of Posts, Department of Expenditure, Department of Economic Services etc.

The minister said all “grameen dak sevaks” in rural post offices will be given handheld devices by March 2017. At present, core banking network of post offices is more than that of State Bank of India, which has 1,666 core banking branches, while 22,137 post offices now have core banking facility. 

The payments bank is also likely to facilitate payments of Central and state governments as well as municipal dues and fees of various universities and educational institutions. 

The payments bank cannot offer loans but can raise deposits up to Rs 1 lakh and pay interest on these balances just like a savings bank account does. It can offer services such as automatic payment of bills, and purchases in cashless, chequeless transactions through a mobile phone.