Nearly Three Years In, India Post Payments Bank In Violation Of Key Licensing Provision

Why Is The Transfer Delayed?

The reasons behind the delays give an insight into why India Post Payments Bank had failed to take off as anticipated.

The Department of Posts, which originally wanted a universal banking license, but was handed a payments bank license, hasn’t been forthcoming in the transfer process, the first of the two people cited earlier said.

There’s some justification to the reluctance.

For its size and financial performance, the India Post Payments Bank may not be ready to handle the volume of business which the postal department manages. The bank’s treasury revenue in the year ended March 2020 stood at Rs 46 crore, marginally lower than Rs 46.4 crore a year before.

Managing over Rs 1 lakh crore in deposits would entail wider and more complex treasury operations.

But there are other reasons for the delay which have to do with inter-departmental turf wars.

The transfer of business hasn’t yet been completed because the Department of Posts has been reluctant, claimed the first person cited earlier. The government is required to issue an order for transfer of this business to the payments bank, which it has not yet done, this person said.

Even if the order is passed, customers will have to be given a choice as to whether they want to continue with the post office or move to the payments bank. The payments bank board is uncertain whether the ground staff will be adequately prepared to handle the transition, this person added.

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