India Post Payments Bank Ltd. is awaiting regulatory approval to transform into a small finance bank as the lender struggles with mounting salary costs and a stagnant business, The Times of India reported Oct. 23.
The bank expects to get approval from the Reserve Bank of India to transform into a small finance bank by early 2020, according to a postal department official. The bank is also looking at an injection of capital from the government.
The payments bank launched in 2018 but has struggled since. The transactions at India Post Payments Bank were limited and small, according to a source. Manpower costs also started mounting and are estimated at 2.5 billion rupees. Sources also said that the payments bank model was flawed from the beginning as "too much money" was invested in technology to set up the core banking system.
As of Oct. 23, US$1 was equivalent to 70.76 Indian rupees.