A Journey of India Post: Letters to Payment Bank

Payment Bank, it’s a new word of Indian Economy. The Reserve Bank of India has granted Payment Bank License to eleven applicants. Those are India Post, Airtel, Vodafone, Reliance Industries Limited, Aditya Birla Novo, Tech Mahindra, Paytm, Cholamandalam, DilipSanghvi, Vijay Sharma and the National Securities Limited. According to the Reserve Bank Governor Mr. Rajan, Universal Banks is all already suffering from bad debt, So Payment Banks help to balance fiscal deficits. He predicted Payment Banks will play major role in country’s fiscal development.

These Payment banks are all coming under Bank Regulation Act, 1949. As per these acts following terms and conditions must follow by licensed applicants.

1. To start a Payment Bank they should have initial deposit Rs.100 Crores.

2. The account holder should not exceed the sum of One Lakh. The Reserve Bank of India may change this characteristic curve.

3. At least 25% of the branches should be opento rural areas.

4. They can give higher rates of interest in only under one year deposits.

5. Payment banks are can’t grant Loans and Subsidies.

6. They can give debit cards, e-banking, mobile banking services but can’t give credit card service.

7. They can’t open NRI account.

8. They must have 15% RWA. You can change this ratio by The Reserve Bank of India.

9. They can do Life insurance and Pension related business.

10. They can operate its own network or facility can be obtained from other network provider.

India Post is the only Department which is in Public Sector. Hence some Economic analysis and critics said that, this is the bold step from Government to privatization of banking sectors. Recently, ten small banks also get licensed from The Reserve Bank, that will show Government’s Point of View, but don’t worry the country's largest network and peoples most trusted department are India Post, which got license of Payment Bank. Before getting of the Payment Bank license department knocked the door of Reserve Bank for Universal Bank licenses, but the Reserve Bank of India asked the initial deposit of 500 Crores. The Government has rejected to give 500 Crores. Hence the application rejected. Now The Postal Department happy to get licenses of Payment Bank. In this regard department has already been in progress. Now nearly 50000 branches are already migrated to Core Banking System, and 1,39,040 Branches is in the rural areas. Within a year all branches will migrate to core banking system. The CBS Finacle software developed by the biggest technology giant Infosys. India Post tied up with Infosys to succeed in Bank. India Post is ready to celebrate an emphatic win in this field but Department must overcome some of the challenges actual it facing.

Challenges

1. The account holder sum limit is one Lakh. Already more than one million accounts are enormous, in this regard extension of the permit to be obtained in this regard in consultation with the Reserve Bank.

2. Lack of skilled employees. Some of the employees are aged they near to retirement they can’t understand that CBS after department conduct the training sessions.

3. Department employees have confusion, they insecure is Government going to divide department or going to privatization, So Government to solve before it.

4. Internet services in rural areas will no longer be available. It can be challenging on the core banking expansion.

5. The core banking offices already facing problem of slow internet, hence it’s necessary to increase the bandwidth. Also provide alternative network provider.

6. The Department appointment of youth that is quickly skilled.

7. Department should have competition Universal Bank and other Payment Bank, with intense competition from urban areas to rural areas. Other banks are in the rural area has already started their work in order to achieve their stewardship.

These encounter challenges successfully filling the country's fiscal deficit and economic development. India Post will play important role in this regard. There is no doubt about one day Post Bank of India is becoming the Largest Bank of India.