Department of Posts to seek Cabinet nod to raise Rs 292 cr to set up payments bank

Expects the fund to be cleared in two months

The Department of Posts (DoP) will approach the Cabinet within two months for raising Rs 292 crore from the public investment board to set-up a payments bank, for which it has already got the RBI approval.

"The DoP is going to take approval for Rs 292 crore fund from Public Investment Board (PIB) after which it will be submitted for Cabinet approval. We expect the fund to be cleared in two months," an official source told PTI.

Payments bank licence allows companies to collect deposits (initially up to Rs 1 lakh per individual), offer Internet banking, facilitate money transfers and sell insurance and mutual funds. Besides, they can issue ATM or debit cards, but not credit cards. 

The postal department had earlier tried for a Rs 632-crore fund from government for full fledged banking services but it was not cleared by the PIB.

Government has in-principle agreed to the entry of Postal department in banking services through the payments bank route.

"The DoP expects to roll out payment bank services by March 2017. There are no major infrastructure issues. Only we need to set up a data centre and disaster recovery centre which will be done soon," the official said.

The Department is also in the final stages of appointing a consultant that will guide it in setting up a payments bank.

According to another official source, the Department may go for a hybrid model under which about 600 branches will be directly operated by payment bank staff in post office premises and transactions in other parts of the country will be supported by its staff.