PIB, under the Finance Ministry, fosters investment proposals by state-run entities.
According to a senior official at Department of Post, the proposal was approved at the PIB meeting held on January 19. The recommendations of PIB will now be placed before the Cabinet for final approval.
The India Post payments bank will target unbanked and underbanked customers in rural, semi-rural and remote areas, with a focus on providing simple deposit products and money remittance services. India Post is already into providing financial services and has about 1.55 Lakh branches across the country.
The pilot for the payments bank is slated for January 2017; the full-fledged operations may start by March.
The department is also in the process of finalising selection of a consultant for setting up of the India Post payments bank. It had shortlisted six consultants but only three submitted the bids.
Over 40 international financial conglomerates, including World Bank and Barclays, are looking to partner with the postal department for setting up the bank.
Payments banks differ from conventional banks as they are not allowed to lend to customers or issue credit cards. They can, however, accept deposits of up to INR 1 Lakh per individual, and can offer current and savings account deposits. They can also issue debit cards and offer internet banking.
Prior to this, mcommerce company, Paytm, received license from the Reserve Bank of India to set up a payments bank in August 2015. Other than Paytm and Department of Post, Aditya Birla Nuvo Ltd, Airtel M Commerce Services Ltd (a part of Bharti Airtel Ltd), Cholamandalam Distribution Services Ltd, FINO PayTech Ltd, National Securities Depository Ltd (NSDL), Reliance Industries Ltd (RIL), Tech Mahindra Ltd, Vodafone M-Pesa Ltd (a unit of Vodafone India Ltd), and Dilip Sanghvi (founder of Sun Pharmaceuticals Ltd) also received approval from RBI.
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