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Rajya Sabha TV The Big Picture: India Post Payments Bank

Rajya Sabha TV The Big Picture: India Post Payments Bank

(Topic covered: Paper IV, General Studies – III

Indian Economy and issues related to planning, Inclusive growth and issues arising from it)

Prime Minister Narendra Modi on 1 September 2018 launched the Payments Bank of Indian postal department that will take banking to the doorstep of every citizen through a huge network of post offices, postmen and ‘Grameen Dak Sewaks’. India Post Payments Bank (IPPB) will be like any other bank, but at a smaller scale without involving any credits risk.


QR card to be provided by IPPB

  • Various types of banks in India are: Cooperative Banks, Foreign Banks, Local Area Banks, Payment Banks, Private sector Banks, Public-Sector Banks, Regional Rural Banks and Small Finance Banks.
  • Payments banks are a new model of banks conceptualized by the Reserve bank of India. They can accept deposits of up to Rs 1 lakh (which may be raised later by RBI), offer remittance services, mobile payments/ transfers/ purchases and other banking services (ATM/ debit cards, net banking and third-party funds transfers.)
  • The recommendations for formation of Payments Bank was given by the Committee on Comprehensive Financial Services for Small Businesses and Low Income Households (also called Nachiket Mor Committee) formed by Raghuram Rajan (then RBI Governor) in September 2013. The panel studied various aspects of financial inclusion in India and submitted its final report on 7 January 2014.
  • Payments bank are licensed under Section 23 of the Banking Regulation Act 1949, and registered as public limited company under the Companies Act, 2013.
  • IPPB is the sixth Payments bank, which has become operational after Aditya Birla, Airtel, Fino, Jio and Paytm Payments Banks.
  • The Government owns 100% in IPPB, which has been set up under the aegis of the Department of Posts. It will offer products and services through counter services, micro ATMs, mobile banking app, messages and interactive voice response.
  • IPPB will offer its services using QR cards. Unlike ATMs and Point of Sales (POS) machines, the postmen will scan the fingerprint, QR card and make the payment. So, the need to remember PIN and other credentials is not required.
  • IPPB will carry out most banking operations like accepting deposits but can’t advance loans or issue credit cards.
  • IPPB has been integrated with Post Office Savings Bank (POSB).
  • IPPB aims to promote digital payments mainly in the rural and remote areas of the country. It will be helpful to rural masses and urban migrants.
  • Despite various efforts by the Government like the Jan Dhan Yojna, it is estimated that about 18% of the Indian population is not being served by the banking system. IPPB can be seen as filling an important gap in the scheme of inclusion.
  • The service available should be efficient and cost effective. Making available a good connectivity and network, for example, can be a major challenge in remote parts for IPPB to be a success. Also, the postmen need to be trained periodically to provide such new services and he may demand an incentive for this new job.
  • To overcome the possible challenges lying ahead required training programs have been started by the Department of Posts. Micro ATMs have been given in many of the Post Offices in rural areas. To sort out the issue of connectivity in remote areas, different connectivity providers are being contacted to issue SIM cards, etc.


IPPB is a welcome step to connect the rural masses and remotest areas of India to banking services. By providing proper training to related persons and making required infrastructures available, the Department of Posts can help effectively in the scheme of financial inclusion.