Govt allocates Rs 500 cr to India Post Payments Bank

New Delhi: Government has allocated Rs 500 crore to India Post Payments Bank for financial year 2017-18 as it gears up to set up 650 branches across country by September 2017.

Government has allocated Rs 125 crore as "capital infusion into corporate entity for India Post Payments Bank" and Rs 375 crore as "grant in aid to India Post Payments Bank (IPPB)", as per Output-Outcome Framework for Schemes 2017-18 for the Department of Posts released today.

India Posts is the second entity to roll out payments bank -- though on a pilot basis -- in Raipur and Ranchi, after Airtel that has earmarked Rs 3,000 crore as initial investment for pan-India operations with an interest rate of 7.25 per cent on deposits.

Besides, Airtel is offering free money transfer from Airtel to Airtel numbers within Airtel Bank, money transfer to any bank account in the country.

The IPPB will offer an interest rate of 4.5 per cent on deposits up to Rs 25,000; 5 per cent on deposits of Rs 25,000-50,000 and 5.5 per cent on Rs 50,000-1,00,000.

The total paid up equity of the new bank IPPB is Rs 800 crore, of which the government has already infused Rs 275 crore.

Payments banks can accept deposits up to Rs 1 lakh per account from individuals and small businesses.

The new model of banking allows mobile firms, super market chains and others to cater to banking requirements of individuals and small businesses.

The allocation to IPPB is part of Rs 1,034.13 crore earmarked for the Department of Posts. The second big chunk of the total allocation, Rs 279.6 crore, has been allocated for providing IT hardware and software in identified rural areas for improved access to services and customer satisfaction, resulting in increase in customer transactions, traffic and revenue.

The DoP has been allocated Rs 110.83 crore for establishing e-commerce, parcel booking, international business centres, Rs 73.5 crore for estates management, Rs 32 crore for mail operations and Rs 17.7 crore for equipments and IT infrastructure in rural post offices.

Government has allocated Rs 3.8 crore for setting up 246 offices and 200 outlets for providing better access to communication and financial services.