PM Modi Launches India Post Payments Bank; Calls It An “Unparalleled” Service In Country’s History
Prime Minister Narendra Modi on Saturday launched the highly anticipated payments bank of the Indian postal department that aims to give last-mile doorstep banking through an unmatched network of post offices and almost 3 lakh postmen and ‘Grameen Dak Sewaks’.
“With the India Post Payments Bank, all underprivileged and common people, in every nook and corner of the country, will get doorstep banking services,” Modi said while announcing the launch of the India Post Payments Bank in New Delhi. “This has opened an avenue to fulfill our long-standing resolution of financial inclusion.”
India Post Payments Bank will be like any other banks but its operations will be on a smaller scale without involving any credit risk. It will carry out most banking operations like accepting deposits but cannot advance loans or issue credit cards.
The postman is now a bank in himself.Prime Minister Narendra Modi
The freshly-minted payments bank will accept deposits of up to Rs 1 lakh, offer remittance services, mobile payments, transfers, purchases and other banking services like ATM/debit cards, net banking and third-party fund transfers.
Communications Minister Manoj Sinha said banking services will be available through 650 branches and 3,250 access points. Deposits in any account that exceed Rs 1 lakh will be automatically converted into post office savings account, he said.
The government owns 100 percent stake in IPPB, which has been set up under the aegis of the Department of Posts. It will offer products and services though multiple channels such as counter services, micro ATMs, mobile banking app, messages and interactive voice response.
India Post Payments Bank will leverage technology to advance financial inclusion. It will use Aadhaar to open accounts, while a QR card and biometrics will drive authentication, transactions, and payments. Grameen Dak Sewaks will be armed with smartphones and biometric devices to handle transactions.
The payments bank will offer 4 percent interest rate on savings accounts. It has also teamed up with financial services providers like Punjab National Bank and Bajaj Allianz Life Insurance for third-party products like loans and insurance.
The Cabinet, earlier this week, approved an 80 percent hike in spending on the initiative to Rs 1,435 crore—arming it with additional ammo to compete in the market with existing operators like Airtel Payments Bank and Paytm Payments Bank.
The bank’s services will be available at 650 branches and 3,250 access points from today. Services will be quickly scaled to all 1.55 lakh post offices by December 2018. Of these, 1.30 lakh access points will be located in rural areas, taking it to a vast untapped market. It also has permission to link around 17-crore postal savings bank accounts with its own set up.
India Post Payments Bank is about bring a transformative change in the society and economy. Our government gave banking access to millions of families using the Jan Dhan scheme. And today, through this initiative we are starting to work towards getting the banks to the people’s doors.Prime Minister Narendra Modi
Suresh Sethi, chief executive officer of the payments bank, had told BloombergQuint earlier that this would help address the lack of last-mile access to banking which has plagued India for decades. Sethi believes that customers in rural India are still more comfortable using ‘assisted services’ before they move on to self-service, particularly in the case of financial products. And that’s where the physical-cum-digital model of India Post Payments Bank will help.
Payments banks were part of the Reserve Bank of India’s strategy of offering differentiated banking licences. Since these entities would provide services to the most vulnerable segments of the population, the regulator placed a fair amount of restrictions on their operations.
It’s tough to say at this stage when the bank will break even, Sethi had said, adding that it will complement its payments bank products with third-party services to build the business model.
(With inputs from PTI)