India Post Payments Bank likely to miss September deadline to open 650 branches

The deadline will not be met because India Post couldn’t set up a system integrator (SI) in the specified time.

India Post Payments Bank is likely to miss the September deadline it had set for itself to open 650 branches across the country.

The deadline is not likely to be met because India Post couldn’t get a system integrator (SI) set up in the specified time, Business Standard reported.

The Reserve Bank of India had given an in-principle nod to 11 entities including the Department of Posts in 2015 for setting up payments banks. Subsequently, India Post launched its pilot service in Raipur and Ranchi in January this year.

Even though the department has a bank license, the payments bank has remained a pilot project because of a struggle to find the necessary technological infrastructure.

According to RBI's mandate, a payments bank has to function mostly digital. The SI will have the job of integrating all the functions of the bank along with the operations of around 30 vendors into one system.

“We really ran into issues fixing the system integrator,” Postal Secretary Anant Narayan Nanda was quoted as saying. “SI, which will integrate all features, has to be there first and that we were not able to fix,” he said.

When India Post first issued a request for proposal last September to finalise a SI, only one company sent its bid. A second RFP was issued a month later and attracted around 28 bids.

Consequently, US IT giant HP was awarded the contract last month and has already started working on the integration of the 30 vendors into the system.

Despite the delay, Nanda refused to believe that India Post had lost its first mover advantage. India Post's payments bank model is slated to very different from that of its peers in the space like Bharti Airtel and PayTm, given that it already has a physical presence all across the country.

The department currently has 1,55,000 post offices under its belt.

“We have the connect to the grassroot…just because somebody has got a telephone number and that telephone number is converted into an account does not mean deposit, withdraw and third party offerings…. So, it has a whole lot of things where connect is most important, that is what we have and it is our business model,” Nanda said.