India Post Payments Bank (IPPB) as an effective vehicle of Financial Inclusion

Introduction

India Post Payments Bank (IPPB) was incorporated on 17th August 2016 under the companies Act, 2013. IPPB is expected to speed up the financial inclusion in India especially in the rural areas with its extensive network of branches.

What are Payment Banks?

Payment banks are specialized banks to receive deposits up to 1 lac
They can issue Debit or ATM cards
They cannot issue Credit cards
They cannot lend money

Regulatory Body

RBI is the authority to license payment banks
RBI approved 11 companies in the initial phase
IPPB is one of the payment banks approved by RBI
IPPB works under the Department of Posts

Purpose of IPPB

Aims to become the top most vehicle of financial inclusion in India
IPPB is expected to bring nearly 40 percent of the Indian population that is outside the ambit of the formal banking sector
Propagate financial literacy across the country
Encourage people to move to a less cash economy
The main goal of IPPB is to become the world’s most accessible bank equipped with modern banking technology

Facts about IPPB

IPPB was proposed to be launched in Budget session of 2015
IPPB becomes the first Public Sector Undertaking (PSU) under the Department of Posts with 100 percent Union government equity
IPPB becomes the fastest rollout for a bank anywhere in the world
IPPB will become the world’s largest bank in terms of time and accessibility
Initially, service will be available through 650 payment bank branches linked with the post offices
Gradually services will be extended to 1.55 lac post offices across the country having physical presence
IPPB will use alternate channels of modern technology including ATMs, Mobiles, POS devices etc
Department of Posts is expected to roll out the IPPB all over the country by September 2017

IPPB Services

IPPB provides demand deposits up to 1 lac through savings and current accounts
Remittances and payments are enabled in a digital manner
IPPB provide access to Mutual funds, insurance, forex, credit products and other third party financial services by establishing partnerships
People can pay educational institutions fee, utilities bill etc. through IPPB
IPPB will offer internet services, mobile banking services, debit cards, mobile wallets, ATMs and POS devices etc.

IPPB Features

Develop a savings habit among people by increasing financial literacy
Beneficiaries will receive MGNREGA wages, social security pensions and other government welfare measures directly to their bank accounts following the already successful DBT model through IPPB
IPPB extends financial inclusion rapidly
Post men are empowered to widen the accessibility of IPPB across the country
The postal delivery system is the most reliable network in India
IPPB will enjoy the trust of India post developed over the years

Benefits

Easy access for customers
Customers can get the leverage of postal network
Wider reach especially in the rural and remote areas
Direct transfer of subsidies to the actual beneficiaries in their bank account through IPPB services of financial inclusion
Transparency in governance will improve
Corruption will be reduced
The intermediaries will be cut
Low cost
Availability of quality financial services across the country

Data Security is a major area of concern. IPPB is launched with huge expectations to develop India as a whole and hope it lives up to the expectations. This is yet another big step of the Government of India towards financial inclusion with the aid of RBI and Department of Posts.