Prasad wants DoP to become vehicle of financial inclusion

Armed with a payments bank licence now, the postal department should gear up to become a vehicle of financial inclusion in the country, Communications and IT Minister Ravi Shankar Prasad said today.

The minister said that the postal department should prepare itself properly and effectively for this opportunity.

The payments bank licence will enable the Department of Post (DoP) to offer banking services to the masses through its vast network of 1,54,000 post offices, of which 1,30,000 are in rural areas.

"This is a very proud moment for the postal department. I have been trying since I became minister to energise and make the vast network of the department for financial digital inclusion and e-commerce activity," Prasad told PTI.

"I am very happy to learn that the postal department has been given a payment banking permission by the RBI. I thank the RBI, governor and his team," Prasad said.

RBI today decided to grant "in-principle" approval to 11 applicants, including DoP, National Securities Depository Ltd and RIL, to set up payments banks.

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.