The Public Investment Board has approved the Rs 800-crore proposal from India Post for setting up a payments bank and it will be placed before the Cabinet within a month for final approval. PIB, under the Finance Ministry, whets the investment proposals put forth by the state-run entities. The department is in the process of finalising the selection of a consultant for setting up India Post’s payments bank. It had shortlisted six consultants but only three of them submitted the bids.

The India Post payments bank will primarily target unbanked and under-banked customers in rural, semi-rural and remote areas, with a focus on providing simple deposit products and money remittance services. The pilot for the payments bank is set to start from January 2017, and the full-fledged operations may start by March. As many as 40 international financial conglomerates including the World Bank and Barclays have shown interest to partner the postal department for setting up the bank.

Payment Banks

• As per the RBI guidelines, a payments bank can offer limited services 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 other prepaid payment instruments but not credit cards.