Finance minister Arun Jaitley and telecom minister Manoj Sinha launch India Post Payments Bank

Union Finance minister Arun Jaitley and Telecom minister Manoj Sinha launched a payments bank by India Post on Monday. India Post is the third entity that recently received the licence to start payments bank operations from RBI last week. Other two entities include Bharti Airtel and Paytm with only Bharti Airtel started its operations as Airtel Payments Bank. Airtel Payments Bank currently offers about 7.25 percent interest on savings bank balances, more than the 7 percent offered by SBI for fixed deposits. Airtel allows you to send the money without any charge from Airtel to Airtel numbers within the Airtel Bank, along with the ability to send money to any bank account in India. This payment bank is a joint venture between Kotak Mahindra and Bharti and according to report by The Economic Times with plans to invest about Rs 3,000 crore in the venture. Paytm, on the other hand, has not started its operations at the time of writing. On the other hand, India Post Payment Bank will start its pilot services in Ranchi and Raipur with plans to increase its growth to 650 branches by September 2017. One interesting thing to note is that the bank is offering an interest rate of 4.5 percent for deposits up to Rs 25,000, 5 percent for the amount from Rs 25,000 to Rs 50,000 and 5.5 percent for the deposit amount between Rs 50,000 and Rs 1,00,000. The government has appointed former Deputy Director-General in-charge for Payments System and Financial Inclusion at UIDAI and 1986 Indian Postal Service Officer AP Singh as the interim CEO and Managing Director of the India Post Payments Bank. India Post Payments Bank is banking on the massive reach of India Post, especially in the rural areas of the country. The government has already infused Rs 275 crore of the sanctioned Rs 800 crore equity for the payments bank. The planned 650 branches of the bank will work as umbrella branches covering about Rs 1.55 lakh post offices across the country. RBI indicated that about 1,000 ATMs located in post offices will be transferred to India Post Payments Bank and the bank would issue RuPay debit cards, as reported by the Press Trust of India. Another important thing as part of the payments bank is the announcement that India Post will equip all the 3 lakh postmen in India with smart devices. This started off in 2015 when RBI granted ‘in-principle’ approval to 11 entities with formal licenses to be given on an ‘on-tap’ basis. RBI has fixed 31 March as the last date for all the 11 entities to receive their formal license.