India Post Payments Bank for Govt Subsidy Transactions

India Posts Payments Bank (IPPB)

• IPPB was launched in September 2018 with 650 branches and 3251 access points.
• Today the bank has around 1.35 lakh access points which are Post offices across the country
• They are in the process of connecting the remaining 20,000 offices shortly.
• Around 1.10 lakh is in rural areas, which has increased the rural banking infrastructure by 2.5 times since it was launched and all banks put together have 49,000 branches.
• The total loss of 5 payments banks stood at 500 crores as on March 31, 2018 which was due to the huge operating expenses as per RBI reports.
• The total deposits of payments bank stood at just Rs. 539 crores as on May 2018

Garnering Government Schemes:

• In order to boost the India Post’s Payments Bank’s (IPPB) business, which is now making its entry to every place through its different outlets, connected through Core Banking Solution and is now contemplating to gain its place to be the preserved bank for transfer of Central and State Government subsidies.
• Let apart the bank also is contemplating to boost its turnover through cross sale of financial products like Mutual Funds and Insurance.
• They are working with State Governments of Maharashtra, Karnataka and North Eastern states, in order to show its last mile’s reach, which even the banks are finding it difficult to compete, the bank is doing POCs (Proof of Concepts) with State Governments.
• The bank is trying to garner the Government schemes like MNREGA and in this regard they have already the Rural Development ministry at the centre.

Services offered by IPPBs

1. Door Step Banking is offered wherein Postmen and Grameen Dak Sewaks (rural Postmen) with a smart phone and bio-metric device go to door steps to provide assisted banking services for a fee.
2. The bank focuses on schemes like Old Age pension scheme and scholarship schemes wherein 80-85% of people are those who receive Government transfers.
3. Also in order to increase their business they are engaging with third party partners to provide other major banking services like Loans, Insurance and Investment products to its customers.
4. The bank also has partnered with Bajaj Allianz Life Insurance to offer Life insurance products to its customers and are proposing to provide health insurance and general insurance products also shortly, let apart they are engaged with Punjab National Bank for restructuring some of the loan products.
5. Another way to earn revenues is Data Monetisation which the bank is looking into which the bank feels is worth taking up since the present public trend is to move from Cash to Digital modes, which generates lot of transaction history which the bank adds could be used for offer other financial products.

NOTE:

• An RBI note stipulates that the Payments Bank are not allowed to lend and that at least 75% of the deposits received by them should be invested in Government business and the balance goes to the demand and time deposits with other scheduled commercial banks which means that very little is left for generating business.
• A transaction fee levied to the customers which is the income for the bank.