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India Post gets Cabinet nod, Rs 800 cr for payments bank

business Updated: Jun 02, 2016 06:28 IST

NEW DELHI: Postmen are set to sport smartphones and iPads soon, as the government on Wednesday gave India Post the go ahead to set up a payments bank with a corpus of Rs 800 crore.

“The Cabinet has cleared proposal of postal payments bank. We have 154,000 post offices out of which 139,000 are in rural India. 650 branches of postal payments bank will be established in the country and will be linked to rural post offices,” telecom minister Ravi Shankar Prasad said.

Prasad also said all ‘grameen dak sevaks’ in rural post offices will be given hand-held devices by March 2017. Postmen in the urban post offices will be given iPads and smartphones to improve efficiency, he said.

Of the total corpus of Rs 800 crore, Rs 400 crore will be equity and the remaining 50% grants from the Central government.

The payments bank will be headed by a chief executive officer and run professionally, Prasad said, adding that there will be representation from various other government departments including the departments of posts and expenditure.

“By September 2017, all 650 branches of postal payments bank will become operational. The plan was to do it in three years but now we will be doing it in a year,” the minister said.

This comes at a time when three private sector players have withdrawn their applications to set up payments banks.

In March, Cholamandalam Investment and Finance shunned its plan to set up a payments bank, while last month a joint venture of Sun Pharmaceutical Industries promoter Dilip Shanghvi, IDFC Bank and Telenor Financial Services dropped out. Tech Mahindra has also given up on its licence.

Responding to the second withdrawal, Reserve Bank of India deputy governor SS Mundra last week, said, “We would certainly feel little aggrieved because lot of efforts goes into processing applications.” Mundra also hinted at a possible penalty for opting out.

Vijay Shekhar Shar ma, co-founder of One97 Communications, said on Monday that the Paytm Payment Bank, which will be owned 51% by him and 49% by One97, will be operational by November this year. The bank will have an initial corpus of Rs 400 crore.

Others including Vodafone and FINO PayTech have also announced plans. FINO PayTech, with partner ICICI Bank, plans to raise Rs 500 crore to finance its operations.

First Published: Jun 02, 2016 06:28 IST