This initiative will bring banking to millions more.
In an age of digital payment gateways, if there is one place which evokes a sense of trust and familiarity, it is the post office. Even if you don’t send letters to people very often, post offices are a comforting sight, and now, they are all set to be access points, for the India Post Payments Bank (IPPB).
According to a report in MoneyControl, Mr Ananta Narayan Nanda, the Postal Secretary, said that the IPPB plans to roll out its branches across India from May 2018 onwards.
Approximately 1.55 lakh post office branches will operate as access points, and 650 payments bank branches will provide back-end support.
An investment of about Rs 1,450 crore has been made for hardware, software, training and staff cost, as well as other expenses.
The RBI granted ‘in-principal’ approval, to 11 entities, including Airtel Payments Bank and Paytm, to set up payments banks. This approval allows mobile firms, supermarket chains, and others to cater to the banking demands of individuals and small enterprises. The Department of Posts is one, and as a payment bank, it can accept deposits up to Rs 1 lakh per account from individuals and small businesses.
However, these entities will not provide loans or credit to customers. A payments bank is a differentiated bank, and its activities are restricted to the acceptance of demand deposits, remittance services, internet banking and other specified services.
The India Post Payments Bank has a lot going in its favour. Doorstep banking and the low costs of transactions might appeal to the populace, according to Nanda, who feels the vast reach due to the sheer number of post offices, and the trust that people have on them, might help.
He expects the IPPB to break even in the third year of its operation.
“There are already around 17 crore post office savings bank accounts which will get some services from IPPB. Even if we can open 50 accounts from each access point of 1.55 lakh, the number will be huge in the first year of operations,” he said to MoneyControl.
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The India Post Payments Bank will have a favourable impact on employment. It is expected to have a 3,500 strong workforce—a recruitment drive for 1700 is already underway, with some employees being from the open market, and others on deputation from government departments, including India Post, says the Postal Secretary.