20 Indiacommercial banks tie up with Post Bano of India.docx

20 commercial banks want to tie up with India Post Payments BankMUMBAI: 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. 

Meanwhile, IDBI Bank BSE -3.48 %  is also in talks with National Securities and Depository

(NSDL), which has received a payments bank licence as well. IDBI Bank is the founding

promoter with 30% stake in NSDL, which has emerged as one of the largest players in

depository business. KP Kharat, MD & CEO, IDByI Bank, said talks are at an early stage with

both the players — India Post and National Securities and Depository. 

In an interview with ET last month, Kharat had said, "This bank has promoted many institutions

like Sidbi, Exim Bank, NSE, NSDL and CARE. I plan to create a synergy with all these

organisations, wherein I am going to exert my parental right." 

GV Nageswara Rao, MD & CEO of NSDL