IndiaPost has become the third entity to receive a final license last week from the Central Bank to start its payment bank operations. Country’s largest telecom service provider Bharti Airtel and digital payments firm Paytm are the other two to have received the license while only Airtel has started operations so far.
The government has also appointed AP Singh has interim MD and CEO of the India Post Payment Bank. A 1986 Indian Postal Service Officer he was earlier Joint Secretary in the department of disinvestment, the ministry of Finance and Deputy Director General in charge of financial inclusion and payments systems at Unique Identification Authority of India (UIDAI). Singh was one part of the founding team that launched Aadhaar and was stationed at the department of Post prior to UIDAI.
As per the initial road map, each post office in the country will offer the post bank services. The department of the post has an existing network of around 1,55,000 post offices currently. ET had reported earlier that IndiaPost plans to open 650 new branches for the payment bank. The branches will be co-located with the existing post offices. The idea is that the 650 branches will be in located in postal district headquarters and all the branches of that particular head post office will be enabled by the payment bank services. This will cover the entire network of 155,000 post offices in the country.
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Earlier this month, Airtel Payments Bank launched nationwide operations, offering 7.25% interest on savings bank balances, which is more than the maximum 7% paid by SBI on its fixed deposits. Bharti and Kotak Mahindra, which holds a 20% stake in the payments bank, would invest Rs 3,000 crore in the venture.
Payments banks can accept deposits from individuals and small businesses of up to Rs 1 lakh per account. And RBI had set a condition that formal license has to be obtained before 31 March.
Paytm also said early in January that it has received the final license from RBI and the company hopes to launch operations in February with the first branch coming up in Noida, Uttar Pradesh.
While the operation of Payment Banks such as Paytm are likely to be focused on technology-based differentiation, IndiaPost is banking on its huge reach especially in the rural areas to be successful.