post payment banks

Breaking Down The Indian Post System’s Features

The India Post Payments Bank is a public sector company under the Department of Posts and the Ministry of Communication where the Indian government holds 100 percent equity. The payments bank will be administered by the Reserve Bank of India. About 1.55 lakh post offices in the country will be linked to the IPPB system by December 31, 2018. Currently, Mr. Suresh Sethi is the managing director and chief executive of IPPB.

The objective of India Post Payments Bank (IPPB) was to cash in on the unparalleled network of post offices and the massive workforce of 3 lakh postmen of the country.

post payment banks

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The government owns 100 percent in IPPB, which has been set up under the guidance and support of the Department of Posts. It will offer products and services through manifold channels such as counter services, micro ATMs, mobile banking app, messages, and interactive voice response.

IPPB also plans to leverage tech platforms. It will make use of Aadhaar to open accounts. With a QR card and biometrics you will be driven to authentication, transactions and payments. Grameen Dak Sewaks will be provided with smartphones and biometric devices to handle transactions.

Following are the main features of the Indian Post Payments Bank.

post payment banks

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  • The institute will function as a banking organization, albeit with a smaller scale of operations. All basic banking operations like accepting deposits will be done. However, the Indian Post Payments Banks is not permitted to offer loans or issue credit cards.

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  • As per the guidelines laid out by the Reserve Bank of India, deposits of up to Rs 1 lakh per customer can be accepted. Other function can be to offer payments and remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking, and third-party fund transfers.

post payment banks

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  • The bank will initially offer 4 percent interest rate on savings accounts. It has also collaborated with Punjab National Bank and Bajaj Allianz Life Insurance for products such as loans and insurance. These services can be accessed through 650 branches and 3,250 access points.

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  • Around 1.30 lakh access points will be located in rural areas. The goal behind creating the IPPB was to bring about financial inclusion, by making it easier for anyone to get a bank account. The IPPB has also received a nod to link around 17-crore postal savings bank (PSB) accounts with its own set-up.

post payment banks

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  • If there occurs deposit in the account exceeding Rs. 1 lakh then it will be converted to post office savings account.

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  • As mentioned above, the IPPB aims to leverage technology in its daily functioning. The payments bank will be using Aadhaar to open accounts, while for authentication, transactions and payments a QR card and biometrics will be put in use. Postmen will be armed with biometric devices as well.

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  • At present, the ownership of the bank lies solely with the government and is operated under the Department of Posts. The services now will be offered through channels like counter services, micro ATMs, apps, voice response and messages.

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  • According to RBI, the aim of setting up of payments banks is to further propagate financial inclusion by providing (i) small savings accounts and (ii) payments/remittance services to migrant labor workforce, low-income households, small businesses, other unorganized sector entities, and various other users.

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  • In order to compete with existing entities such as Airtel and Paytm Payments Bank, the Cabinet gave a nod to 80 percent hike in spending on IPPB to Rs 1,435 crore. This will provide the IPPB a competitive edge in the market.

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  • At present, the transfer of money to various apps such as Paytm is not allowed. Also, a digital/virtual card is not offered as of now. With the progress of time, it is hoped that these add-on services will be offered which will make IPPB a greater success in the future.