India Post Payments Bank receives 40 partnership proposals for new venture

The Payments Bank from India Post, expected to start operations by March 2017, has received proposals from 40 domestic and global companies for a partnership in the new venture.

"The process of setting up the Payments Bank is in progress," said Ravi Shankar Prasad, minister for communications and IT at an event here.

"We have so far received proposals from 40 global and local companies who want to sell insurance products, financial products, government-to-public services and private-to-public services with the Payments bank which is backed by the strong network of India Post," he added.

Earlier, the Department of Posts had stated that around 25 companies such as Deutsche Bank, State Bank of India, ICICI bank have shown their desire to partner India Post Payments Bank.

Global companies such as Barclays have also shown interest in joining the network of the payments bank.

In August this year, the Reserve Bank of India (RBI) approved payments bank plans of 11 firms, including Paytm, Reliance Industries, Bharti Airtel, postal department and Vodafone.

According to RBI guidelines, the first branch of the Payments Bank has to be set up within 18 months. The bank will be able to bring out products such as demand deposits and remittances.

They will not be allowed to undertake lending activities and initially be restricted to hold a maximum balance of Rs 1 lakh per customer.

However, they will be allowed to issue ATM and debit cards as other prepaid payment instruments, but not credit cards.

The new unit of India Post will use the existing infrastructure of the postal department and will pay user charges to the department.

Under the Payments Bank, the initial plan is to have 650 main branches where the department has head or bigger post offices. Subsequently, 25,000 "spoke" branches will be set up while the other 130,000 post offices will act as business correspondents.

The minister today inspected the e-commerce parcel delivery centre in Mumbai, which is handled by India Post and is dedicated it to the nation.

The e-commerce parcel delivery arm of the postal department has made a business of around Rs 1,000 crore from the cash-on-delivery model, out of the more than Rs 95,000 crore cash-on-delivery business done annually, he added.