Prime Minister launches India Post Payments Bank

It will accept deposits of up to ₹1 lakh, offer remittance services, mobile payments and other banking services and third-party fund transfers.

Prime Minister Narendra Modi on Saturday, September 1, 2018, launched a payments bank of the Department of Posts that will take banking to the doorstep of every citizen through an unmatched network of post offices and almost 3 lakh postmen and ‘Grameen Dak Sewaks’.

The India Post Payments Bank (IPPB) 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 won’t advance loans or issue credit cards.

The 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 the IPPB would be available through 650 branches and 3,250 access points. Deposits in any account that exceed ₹ 1 lakh would be automatically converted into post office savings account.

The government owns 100 per cent in the IPPB, which will offer products and services though multiple channels such as counter services, micro ATMs, mobile banking app, messages and interactive voice response.

The IPPB will leverage tech platforms. 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.

It will offer 4 per cent interest rate on savings accounts. The IPPB has teamed up with financial services providers like the PNB and Bajaj Allianz Life Insurance for third-party products like loans and insurance.

The Cabinet, earlier this week, approved an 80 per cent hike in spending on the IPPB to ₹1,435 crore - arming it with additional ammo to compete in the market with existing operators like Airtel Payments Bank and Paytm Payments Bank.

IPPB services will be available at 650 branches and 3,250 access points from September 1, but will be quickly scaled to all 1.55 lakh post offices by December. Of these, 1.30 lakh access points will be located in rural areas, taking it to a vast untapped market. The IPPB also has permission to link around 17-crore postal savings bank (PSB) accounts with its own set-up.