RBI may give payment bank licence to postal department in August: Ravi Shankar Prasad

NEW DELHI: Union Minister Ravi Shankar Prasad today said he expects Reserve Bank of India (RBI) to grant payment licence to the proposed Post Bank of India by August.

This will enable the network of 1,54,000 post offices (including 1,30,000 rural post offices) to offer banking services to the masses in the country.

"We expect RBI to give payment bank licence to post (department) in August," Minister of Communications and IT Prasad said.

In last one year, the Department of Post (DoP) has networked 27,215 post offices into one national unit through computers.

The DoP, which has applied for a payment bank licence, has a hybrid model in mind to operate Post Bank of India.

As per RBI guidelines, payment 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.

According to a source, Prasad has approved hybrid model suggested by Ernst & Young which prepared detailed project report on Post Bank of India (PBI).

"E&Y has come out with three models but suggested preference to a hybrid model. Under which about 600 branches will be directly operated by PBI staff in post office premises and transactions in other parts of the country will be supported by India post staff," a post bank official said.

Post Bank of India is proposed to have its own employees and IT infrastructure. The transaction handled by India Post, employees will be entered in to the server of PBI.

The Department expects revenue of over Rs 550 crore from PBI in first five years.