The Department of Posts’ plan to set up a payments bank has come one step closer to reality with The India Post Payments Bank Ltd (IPPB) receiving the certificate of incorporation from the Registrar of Companies on Wednesday.
“With the incorporation, the Board of the India Post Payments Bank Limited is likely to be constituted soon. The incorporation of the IPPB Ltd is a significant step forward as this also paves the way for the bank to begin hiring of banking professionals to set up the bank and begin its operations in 2017,” an official statement said.
The Department of Posts is expected to complete the rollout of its branches all over the country by September 2017. In June, The Indian Express reported that the Department of Posts had written to CMDs of several public sector banks to borrow officials from these lenders to fill the posts of chief executive officer and chief operating officer of the department’s upcoming payments bank.
The postal department’s secretary SK Sinha had said that it has written to CMDs of Punjab National Bank, Bank of Baroda, Bank of India, Canara Bank and Union Bank to ask if any of the board-level or executive director-level employees were willing to join the postal payments bank on a one-year deputation basis as CEO and COO.
To avoid conflict of interest, a similar letter was not sent to India’s largest lender State Bank of India because of its partnership with Reliance Industries Ltd, which has been granted a payments bank licence by the Reserve Bank of India.
The India Post Payments Bank will be managed professionally and most of its Grade A employees will be hired from market. The bank’s board will have representation from various other government departments, including the Department of Posts, Department of Expenditure, Department of Economic Services etc. According to a presentation made by Department of Posts to former Minister of Communications and Information Technology Ravi Shankar Prasad on June 2, the remuneration package for employees has been kept competitive to attract talent from public sector banks. Following withdrawal of three applicants that had been given in-principle licences for payments bank, Postal Secretary S.K. Sinha had allayed the fears of lack of a business model in the project, suggesting that the plan made sense for those entities, which have an outreach across the country.
“Coupled with the physical presence across 1.55 lakh post offices and the reach of “The Dakiya”, the India Post Payments Bank aims to become a powerful and effective vehicle of real financial inclusion in the country,” the statement issued Thursday said.