Government to register postal bank by year end

New Delhi: The government is likely to register the postal bank by the end of the year while a pilot for payment services will be launched around January 2017.

According to sources, as per the timeline for setting up postal bank, approval from NITI Aayog will be secured by mid-October followed by public investment board's nod by October-end and Cabinet approval in November.

"The registration for postal bank is planned be done in December and a pilot will be launched in January 2017," said an official in the Communications and IT Ministry.

He said the bank will be an independent company with initial corpus of Rs 300 crore and the new entity will enter into revenue sharing model with the Department of Posts (DoP).

The Reserve Bank had granted in-principle approval to 11 applicants, including DoP, in August 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.