'Payments banks will be face of govt in rural areas'

 Payments banks with no geographical boundary will change the way banking is done in India. It will help lenders reach the poorest of the poor, Finance Minister Arun Jaitley said on Monday.

The minister was talking at the launch of India Post Payments Bank, which recently received the RBI’s approval to rollout banking operations.

Payments banks seek to reach customers mainly through mobile phones as opposed to traditional bank branches. They can raise deposits of up to Rs 1 lakh, pay interest but cannot offer loan. These banks can offer services such as payment of bills, transfer of money and chequeless transactions through mobile phones.

“Payments banks can pose challenges to traditional banks due to lower cost,” Jaitley said.

India Post Payments Bank CEO A P Singh said it will offer 4.5% interest on deposits up to Rs 25,000, 5% on Rs 25,000-50,000, 5.5% on Rs 50,000-1,00,000.

He said there are no charges for electronic transfer done in India Post Payments Bank. All ATMs currently operated by the Postal Department will be transferred to India Post Payments Bank.

One branch each will be opened in all districts and each branch will be linked to five to eight major post offices in a district. Hand-held machines will be given to all postmen across the country. The payments model also allows supermarket chains and others to cater to banking requirements of individuals and small businesses.

“Rural India is going to benefit a lot from it. In olden days, a postman used to be the face of the government in remote areas. Imagine if today the same postman becomes your bank?” he quipped.