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India Post Payments Bank
Jun 13, 2016

The Union Cabinet has recently given its approval for setting up the India Post Payments Bank (IPPB) as a Public Limited Company under the Department of Posts, with 100% Government of India (GOI) equity.

The Beginning

  • The total expenditure involved in this project is Rs 800 Crore.
  • All citizens, especially 40% of the country's population that is outside the ambit of formal banking in the country will benefit from this project.
  • The project will be rolled out in the entire country in a phased manner.

650 Payment Branches

  • The IPPB will obtain banking licence from RBI by March 2017 and by September 2017, its services will be available across the country through 650 payments bank branches, linked post offices and alternative channels riding on modern technology including mobiles, ATMs, PoS/ m-PoS devices etc and simple digital payments.

Financial Inclusion is the Goal

  • The proposal will further the cause of financial inclusion by providing basic banking, payments and remittance services and facilitate financial services like insurance, mutual funds, pensions and access to credit in tie-up with third party financial providers with special focus on rural areas and the unbanked and under-banked segments.
  • It will generate new employment opportunities for skilled banking professionals and will generate opportunities for propagating financial literacy across the country.
  • It will create the largest bank in the world in terms of accessibility and in time, will encourage the move towards a less cash economy.

What Payment Banks can do?

  • They can’t offer loans but can raise deposits of upto Rs. 1 lakh, and pay interest on these balances just like a savings bank account does.
  • They can enable transfers and remittances through a mobile phone.
  • They can offer services such as automatic payments of bills, and purchases in cashless, chequeless transactions through a phone.
  • They can issue debit cards and ATM cards usable on ATM networks of all banks.
  • They can transfer money directly to bank accounts at nearly no cost being a part of the gateway that connects banks.
  • They can provide forex cards to travellers, usable again as a debit or ATM card all over India.
  • They can offer forex services at charges lower than banks.

Background

Setting-up of the IPPB to further financial inclusion was one of the budgetary announcements during 2015-16. The Department of Posts had obtained the in-principle approval of the RBI in September 2015 to set up the India Post Payments Bank. The India Post Payments Bank will leverage the Department’s network, reach, and resources to make simple, low-cost, quality financial services easily accessible to customers all over the country.


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