Cabinet approves India Post payments bank proposal

The Indian Union Cabinet approved a proposal by the department of posts’ for foray into the banking sector by launching the India Post Payments Bank, a development that would help the central government in its initiative of 100% financial inclusion. (Financial Express)

“The India Post Payments Bank will be a game changer for financial inclusion of the poorest of poor people,” said Ravi Shankar Prasad, Union minister for communications and information technology. “It will be the largest banking network in the world.”

As per the proposal approved by the Cabinet, the India Post Payments Bank will be set-up as a public limited company under the department of posts, with a total investment of Rs 800 crore, according to a government statement. Of this Rs 400 crore would be infused by the government as equity and the remainder would be given as grant for the next five years, it showed. The secretary of the department will be a part-time non-executive chairman of the bank’s board.

Department of Posts, is a Government -operated Postal System in India. Generally referred to within India as “the post office”, it is the most widely distributed postal system in the world. The postal service is under the Department of Posts, which is part of the Ministry of Communications & Information Technology of the Government of India.

As of 31 March 2011, the Indian Postal Service had 154,866 Post Offices , of which 139,040 (89.8%) were in rural areas and 15,826 (10.2%) in urban areas. It had 25,464 departmental Post Offices and 129,402 Extra-Departmental Branch Post Offices. On average, a post office serves an area of 21.23 square kilometres (8.20 sq mi) and a population of 7,114. Because of its reach and presence in remote areas, the Indian postal service is also involved in other services such as small-savings banking and financial services.