India Post Payments Bank Receives $74 Mn In Latest Union Budget; Plans To Open 650 New Branches

India Post has been reportedly granted $74 Mn (INR 500 Cr) in the latest Union Budget 2017-18. The allocation has been made keeping in mind India Post’s aim to open 650 new branches for the payments bank.

As per an ET report, the government has allocated $18 Mn (INR 125 Cr) as “capital infusion into the corporate entity for India Post Payments Bank” and the rest, $56 Mn (INR 375 Cr) will be allocated as “grant-in-aid to India Post Payments Bank (IPPB).” The following allocations have been made in accordance with the Output-Outcome Framework for Schemes 2017-18 for the Department of Posts, India.

In February 2016, the Public Investment Board (PIB) approved India Post’s $116.7 Mn (INR 800 Cr) proposal for setting up a payments bank. According to the government’s proposed plan, each post office in the country will offer post bank services. In January this year, it received a final license from the Central Bank in order to kick start its payment bank operations.

As per the ET report, the Payments bank under India Post will offer an interest rate of 4.5 % on deposits up to INR 25,000; 5 % on deposits of INR 25,000-INR 50,000; and 5.5 % on INR 50,000-INR 1,00,000.

The Reserve Bank of India had granted a payments bank license to Airtel on April 11 2016. Besides Airtel, Vodafone, Reliance Industries, Idea Cellular, Paytm, FINO Paytech, India Post and National Securities Depository Limited have all received Payments Banks licenses in the direction of greater financial inclusion.

In August 2015, mcommerce company Paytm received a license from the Reserve Bank of India to set up a payments bank. In December 2016, Airtel beat Paytm to launch the pilot of its Payments Bank Limited, Airtel Bank in Rajasthan. Following the same month, Paytm’s parent company, One97 Communications issued a public notice that it would be transferring its wallet business, after necessary approvals, to the newly-incorporated Payment Bank entity.