India Post Payments Bank (IPPB), what is it? Do you know all about India post payment bank? India post payment bank is a public sector 100 percent government-owned bank. It operates with the post office department under the Ministry of communication.
The Bank aims to use all 155,015 Indian post offices as a contact point and three (3) lakh postmen and Grameen Dak Sewaks to provide banking services from house to house in India.
India post payment bank’s first phase was inaugurated on September 01, 2018, with 650 branches and 3,250 post offices as contact points. As of January 2022, the Bank acquired approximately five (5) crore customers throughout India.
All about India Post Payment Bank (History)
On August 19, 2015, India Post received permission/license from the Central Bank of India to operate a payment bank. On August 17, 2016, it was registered as a public limited Govt. company to establish a payment bank.
The IPPB pilot project was inaugurated in Ranch and Raipur on January 30, 2017. The first phase of the national inauguration took place on September 01, 2018. The Union Cabinet, in August 2018, approved a cost of 1435 crore for the establishment of the IPPB bank.
What Is India Post Payment Bank?
Payment banks offer the most common banking activities like money transfer services, withdrawals/deposits, online banking, transfers from third parties, and mobile payments/purchases/transfers.
However, compared to regular banks, these operate on a small scale and do not take credit risk.
Their setup reason is economic inclusion to reach the nation’s unbanked population, which, according to the Assocham-EY report, is more than 19 percent of our population.
India post payment bank would be like any other bank, but the Bank would operate on a small scale without credit risk and will not lend in advance or issue credit cards.
How is India Post Payment Bank Different from Other Banks?
Other banks (commercial banks) can take any amount from customers as a deposit, whereas for payment banks, this limit is Rs. 1,00000. Customers can take credit cards from commercial banks, but payment banks cannot give credit cards to customers.
Customers can take loans from commercial banks, whereas IPPB payment bank does not provide this facility.
IPPB must work with other financial service providers to offer their customers third-party products such as loans and insurance.
For example, India Post Payments Bank has partnered with financial service providers such as Punjab National Bank, TATA AIG, and Bajaj Allianz Life Insurance for third-party products. IPPB offers insurance plans under the name India post-payment bank insurance.
Payment banks can only accept deposits up to Rs 1 lakh per customer in a savings/ current account.
Opening an account in a traditional bank takes time, as it needs a lot of documentation and verification. But payments banks, which rely mainly on mobile technology, can simplify the account opening process fast and paperless.
Things to Know About India Post Payment Bank
- The Indian Post Payments Bank has been established under the control of the post department and is wholly owned by the Government of India.
- IPPB started Working on January 30, 2017, with the opening of two pilot branches, one in Ranchi and the other in Raipur.
- The Indian post-payment Bank offers 4 percent interest on savings accounts.
- The payment bank can accept deposits from individuals and small companies up to 1 lakh per account but is not authorized to lend to anyone.
- India Post Payments Bank, in collaboration with other financial services providers, offers third-party products. For example, in the case of loans, India Post Payments Bank acts as a PNB (Punjab National Bank) agent.
- A range of products like current and savings accounts, direct benefit transfers, money transfers, utility and bill payments, and corporate and merchant payments are offered by the Indian Post Payment Bank.
- The India Post Payments Bank technology platform offers these products and services through several channels (counter services, mobile banking applications, micro-ATM, IVR, and SMS).
- IPPB (Indian Postal Payment Bank) has been authorized to link approximately 17 million PSB (Postal Savings Bank) accounts to its accounts.
- Post Payment Bank of India is “designed to be accessible, affordable, and reliable for ordinary people,” the government said in a statement. It uses an extensive network of postal networks that covers all corners of the country with more than 300,000 postmen and Grameen dak sewaks
- Earlier the government approved an 80 percent increase in the spending of the Indian Post Payment Bank to 1,435 crores. With this increase, the cost of the IPPB project will increase to 1,435 crores from 800 crores – which will provide strength to compete in the market with existing operators such as Airtel Payment Bank and Paytm Payment Bank.
Documents Required to Open IPPB Account?
To open a savings account in Post Office Payment Bank, you should have a PAN card, Aadhaar number, and mobile phone number. If you do not have a PAN card, you must submit Form 60.
India Post Payment Bank Form
To open an account in India post payment bank, you can download an account opening form online from indiapost.gov.in. Fill in the details and submit the form.
India Post Payment Banks’ Importance
Moving ruler residents of India to formal banking had been a significant challenge. As per the World Bank’s FINDEX 2017 report, the main reasons for the unbanked not having a bank account and not transacting through banks were:
- To start banking, people do not have sufficient money.
- Distance from banking facilities and cost are hindrances.
- These unbanked do not have an account because their family members already have one.
- Mistrust in the financial system and the lack of documents.
Keeping the above points in mind, IPPB has significance for the unbanked people of the country as it will overcome these obstacles. It is easier for people living in remote areas to do banking through a post office or the nearest post office.
The current perception of the post office can help them overcome the hesitation of visiting bank branches and dealing with bank employees. IPPB is government-owned, so the people have trust in the Bank.
If rural savings shift to the banking system, it will accelerate the transition from physical assets such as real estate and gold to financial support. Another positive point would be to free farmers and other villagers of rural India from the clutches of moneylenders.
Also, India Post, which has suffered losses due to high operating costs and declining revenues, will have new life opportunities, and Post-owned properties can be used for more sustainable income streams.
The India post payments bank launched by the Indian Postal department aims to take banking to the doorstep of rural residents. The postal department takes every step for the general public to know all about India Post Payment Bank.
According to the central government, IPPB revolutionized the banking system in India and has affected areas where traditional banks are unwilling and hesitant to go.
The services provided by Indian Post Payment Bank are cheap but not free. For example, the NEFT charges up to 10,000 are Rs 2.5, and Rs. 4.75 from 10,001 to 1,00000.