Hopes of the Department of Posts (DoP) to launch full-fledged banking operations seem to have hit a roadblock, with the Planning Commission opposing government funding to start the project. The DoP has moved a Cabinet note for the government to provide Rs 500 crore as initial capital to India Post towards starting a bank. According to the Reserve Bank of India (RBI)’s norms for applying for a new banking licence, an entity needs paid-up capital of at least Rs 500 crore.
Officials said the commission felt providing the Rs 500 crore needed as initial paid-up capital for launching the bank might not be feasible, owing to the tight fiscal conditions. “Though in principle, the commission does support the proposal, the current weak financial conditions are acting as a hindrance,” said a senior official.
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