To start banking operations, the Indian Department of Posts (DoP) had projected earlier the need of about Rs 1,900 crore. Now the DoP has has lowered the amount to about Rs 623 crore. The DoP has applied for a banking licence.
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 Reserve Bank of India is expected to issue licences to shortlisted entities in January 2014.
The Indian postal department is planning to start 50 bank branches in the first year and scale it up to 150 branches in five years. 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.