Prime Minister Narendra Modi on Saturday launched the payments bank of Indian postal department that will take banking to doorstep of every citizen through an unmatched network of post offices and almost 3 lakh postmen and 'Grameen Dak Sewaks'.
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 can't advance loans or issue credit cards.
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 IPPB 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 in IPPB, which has been set up under the aegis of the Department of Posts, and will offer products and services through multiple channels such as counter services, micro ATMs, mobile banking app, messages and interactive voice response.
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 percent interest rate on savings accounts. IPPB has teamed up with financial services providers like PNB 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 IPPB 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.
IPPB services will be available at 650 branches and 3,250 access points from today but 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 vast untapped market. IPPB also has permission to link around 17 crore postal savings bank (PSB) accounts with its own set up.