DoP seeks Cabinet nod for payments bank proposal

New Delhi, Apr 27 (PTI) The Department of Posts (DoP) has sought Cabinet approval for its payments bank proposal involving a project cost of Rs 800 crore.

The Public Investment Board (PIB) has recommended that the payments bank may be set up as a public limited company under the Department of Posts with 100 per cent government equity.

"With a project cost of Rs 800 crore (Rs 400 crore equity and Rs 400 crore grant) and the draft cabinet note has been forwarded to Cabinet Secretariat seeking the approval for the project," Telecom Minister Ravi Shankar Prasad said in a written reply to the Lok Sabha.

The Reserve Bank of India granted in-principle approval to DoP for setting up payments bank on September 7, 2015, with a stipulation to complete all formalities for setting up the bank with 18 months.

The present proposal is that the India Post Payments bank (IPPB) may set up one headquarter and up to 650 branches co-located in district headquarter post offices.

"...more than 60 large companies have approached the Department of Posts for collaboration with the prospective IPPB," the Minister added.

Prasad said the project may be rolled out in a phased manner and the bank may complete its nation-wide rollout in five years.

"All the post offices in a district may be linked to the respective IPPB branch and may become the access point for the services of payments bank and will coordinate with the payments bank branches to which they are mapped," the Minister said.

He further said services available through the payments banks will be basic banking services like acceptance of demand deposits such as current and savings accounts up to a balance of Rs 1 lakh, various kinds of payments, including social security payments like DBT payments, person to person remittances (both domestic and cross-border).

"Apart from these, financial products like insurance, mutual funds, pensions, credit etc may be distributed through third party tie ups with banks and other financial service providers especially in rural areas and among the under banked segments of the society," he added.

Regarding International Finance Corporation, a member of World Bank, has shown interest in picking up stake in the business, Prasad said some preliminary discussions had taken place but no formal proposal to this effect has been received.