DoP to seek Cabinet nod for Rs 292 cr to set up payments bank

New Delhi: The Department of Posts (DoP) is expected to seek Cabinet nod within two months for raising Rs 292 crore from public investment board to set-up 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 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 will allow 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 Department expects revenue of over Rs 550 crore from PBI in first 5 years.

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

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

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

The postal department computerised about 25,000 of its departmental post offices but rural post offices will be provided handheld devices for digitalising records.

The Department is in final stages of appointing a consultant that will guide it in setting up payment banks.

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 India post staff.

The payments bank entity is proposed to have its own employees and IT infrastructure.