TIE UP WITH INDIA POST PAYMENTS BANK

TIE UP WITH INDIA POST PAYMENTS BANK

MUMBAI: About 20 commercial banks have initiated talks with the department of posts for a strategic tie-up with its proposed payments bank India Post Payments Bank. 

Department of posts is among the eleven applicants to have received approval from the Reserve Bank of India (RBI) to float a payments bank. The tie-up will involve payments banks sourcing loans for commercial banks, while commercial banks will offer credit cards to customers of payments banks. 

Speaking to ET, PN Ranjit Kumar, postmaster general (Mumbai), said, "All payments banks are expected to get into alliance or collaborations with some leading banks or financial institutions. Several commercial banks have evinced interest to forge tie-ups with India Post Payments Bank. However, it is premature for India Post to consider partnerships at present." Payments banks are expected to ride on technology to of-fer cheaper and quicker remittance service to customers, and many banks fear that they could actually eat into their business. 

As per regulations, they can collect deposits of up to Rs 1 lakh, provide debit cards and offer thirdparty transactions, but they can neither offer loans nor provide credit cards. 

India Post received 20 proposals, including from the State Bank of India and IDBI Bank, said people familiar with the matter. Arundhati Bhattacharya, chairman of SBI, refused to comment on the alliance, saying that it is too premature to talk at this juncture. "It is two sides of the same coin. They can be a threat in some areas but they can also open up opportunities for us which we need to maximise on," she said, dwelling on the threat aspect.

Source: http://economictimes.indiatimes.com