 "DoP cuts banking fund proposal to Rs 623 cr from Rs 1900 cr")
The Department of Posts (DoP) has lowered its estimate of funds that it needs to start banking operations to about Rs 623 crore from its earlier projection of about Rs 1,900 crore, sources said.
The proposal for Rs 623 crore includes Rs 500 crore that is required as paid-up capital under RBI's new banking licence norms. 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 expected to issue licences to shortlisted entities in January 2014.
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"The DoP has lowered the proposal for funds it needs to start banking operations from about Rs 1,900 crore estimated earlier to about Rs 623 crore," a government official told PTI.
The government has sent the DoP's fund proposal to the Expenditure Finance Committee. Once cleared by EFC, the proposal will be placed before the Cabinet for final approval.
The DoP is planning 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.
Finance Minister P Chidambaram in this year's Budget proposals had said post offices would become part of the core banking solution (CBS) and offer real time banking services.
He had proposed a provision of Rs 532 crore for the project in 2013-14.
The Post Banks are proposed to be owned by DoP but with a completely independent board, governance structure and operations. It will have representation from Ministries of Finance and Communication & IT.