PIB to consider postal dept's Rs 800 cr payment bank proposal

The Public Investment Board (PIB) is likely to consider on Janaury 15 a Rs 800-crore proposal from Postal Department for setting up payments bank.

After the PIB's approval, the proposal will be moved to Cabinet within a month. PIB under the Finance Ministry vets investment proposals by state-run entities.

"The PIB will consider the DoP's Rs 800-crore proposal for setting up payments bank in its meeting on January 15," an official source told PTI.

The pilot for payments bank is set to start from January 2017 while full-fledged operations may start by March 2017.

As many as 40 international financial conglomerates, including World Bank and Barclays, have shown interest to partner with Postal Department for the payments bank.

The Reserve Bank of India has granted payments bank permit to the postal department, which has 1.55 lakh branches across country and already provides financial services.

As per RBI guidelines, payments banks would offer a limited range of products such as demand deposits and remittances. They will not be allowed to undertake lending activities and will initially be restricted to holding a maximum balance of Rs 1 lakh per individual customer.

They will be allowed to issue ATM or debit cards as also other prepaid payment instruments, but not credit cards.

The DoP has shortlisted six consultants including McKinsey, KPMG, Ernst and Young and PricewaterhouseCoopers to advise it on setting up of payment banks.