The Union Cabinet has approved the setting up of India Post's payments bank at a total project cost of Rs 800 crore, on Wednesday.
The India Post Payment Bank (IPPB), which will generate employment opportunities for about 3,500 skilled banking professionals, will set up 650 branches and 5,000 ATMs across the country. IPPB expects to break even by year seven of its operations. “The total fund requirement for the proposal is Rs 800 crore, which will be split up as Rs 400 crore equity and Rs 400 crore as grant,” Communications and IT Minister Ravi Shankar Prasad said.
He added that IPPB will start operations in March 2017 in about 50 districts and will cover the entire country by the end of FY 2018-19. The announcement comes close on the heels of three of the 11 entities given in-principle approval for payments banks by the RBI, dropping out of the race.
A Payments Bank can hold a maximum balance of Rs 1 lakh per customer; can an issue ATM/debit cards but not credit cards; offer payments and remittance services; deal in simple financial products like mutual fund units and insurance products. They, however, can not undertake lending service.
“With 1.54 lakh Post offices and 650 Payments bank branches in district HQ locations on core banking, it will be the largest bank in the world in terms of reach. All post offices, including the 1.39 lakh rural post offices, will be the access points for IPPB,” the minister said.
The Secretary, Department of Posts will be the Part time, Non-Executive Chairman of the Bank.