Date : 23.7.2016
India Post to Open Payment Bank in Every District in India
India Post to Open Payment Bank in Every District in India
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Posted: 22 Jul 2016 11:41 AM PDT
India Post expects to start the first 50 branches of its payments bank by May 2017, seeking to widen financial inclusion in the country.
As per the current plan, India Post Payments Bank (IPPB) - as it has been termed will eventually have 650 branches across the country.
While the first set of branches will open by May, the remaining will start operations by September 2017, a top official of the Department of Posts said.
The department hopes to submit a final proposal to the Reserve Bank of India by February, ahead of the March 2017 deadline, after it has the required management and technology in place, SK Sinha, secretary, Department of Posts, told .
The RBI gave in-principle approval to 11 applicants in August last year, including the Department of Posts, Aditya Birla Nuvo, Airtel M Commerce Services, Fino PayTech, National Securities Depository, Reliance Industries, Tech Mahindra and Vodafone m-pesa, for setting up payments banks. Three of the 11 entities have decided to back out, citing unviability.
India Post, with a network of about 155,000 post offices, will hire almost 2,000 people for the payments bank operations.
"There will be nine board members, five from outside and four internal people from the department, including the CEO," said Sinha.
The department is contemplating whether it can form its own search and selection committee to appoint a CEO or rely on the standard procedure followed by public sector banks for top-level appointments.
The department has written to state-owned banks seeking nominations. Sinha said the State Bank of India has responded with some names.
"For the next rung of leadership such as the chief financial officer, chief operating officer and chief technology officer, we are forming an internal committee," he said. The government has approved Rs 400 crore equity and Rs 400 crore grant for IPPB.
Alibaba-backed Paytm is the other or payments frontrunner for payments banks in India and has drawn up a largely branchless model.
Sinha said that India Post is looking at catering to the unbanked population of the country with the idea of opening one branch in almost every district of the country.
"Most of the other players may not be even thin king of the areas that we want to service," said Sinha. The plan is to have most of the banking features such as money transfer and internet banking, apart from offering credit (in partnership with other banks or institutions), along with financial products such as mutual funds.
Sinha is betting big on the government's direct benefits transfer scheme to drive transactions, with welfare payments being deposited in the bank accounts of consumers.
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