NEW DELHI: The Communications and IT Ministry will move the Cabinet to seek approval for funds needed to run banking operations of India Post in case the department gets a licence from RBI.
Sources said that the postal department had requested the Finance Ministry to allot funds of Rs 623 crore to finance proposed banking debut but that has not been approved yet.
Speaking to PTI on the matter, Telecom Minister Kapil Sibal said, “We are just awaiting Reserve Bank of India’s decision and then we will go to the Cabinet.”
When asked about the possibility of a banking licence in absence of funds, he said, “That issue is yet to come to the Cabinet. In principal, if Reserve Bank of India allows us licence for Post Bank, then it will have to go to the Cabinet because funds are required.”
“We will see in the Cabinet what happens?” he added. The Department of Posts (DoP) lowered its estimate of funds for running banking operations to about Rs 623 crore from earlier projection of about Rs 1,900 crore.
The proposal for Rs 623 crore includes Rs 500 crore as paid-up capital under RBI’s new banking licence norms. Another Rs 123 crore is for infrastructure that is needed to comply with the new norms.
The DoP has applied for a banking licence. The Reserve Bank of India is working on names of shortlisted entities which are yet to be announced.
Sources said that the telecom ministry had sent the DoP’s fund proposal to the Expenditure Finance Committee from where it was sent to Public Investment Board but funds were not approved by the board.
Instead, a Finance Ministry official asked DoP to become a banking correspondent and help other banks, but the official retracted his stand and issued corrigendum, a source said.
Sibal denied difference of opinion with the Finance Ministry and said that the matter will be discussed at the Cabinet meeting.
The DoP has plans to start 50 bank branches in the first year and scale it up to 150 branches in five years. There are around 90,000 bank branches in the country and provision of real-time banking services through postal network is estimated to triple the current banking network.
India Post early this month started ATM facility in Delhi and Tamil Nadu. The first ATM in Chennai was launched by Finance Minister P Chidambaram and the second by Sibal in Delhi.