Post offices turn into banks: PM launches India Post Payments Bank

The people of the country will now be able to avail services of the new banking facility at 650 branches of India Post Payments Bank (IPPB) and 3250 access points.

The new banking facility is being introduced to provide banking facilities to people in general and the rural populace to make them part of the growing digital economy of the country.

With the launch of India Post Payments Bank, we will take banking to the doorstep of the unbanked, and bridge the last mile gap in financial inclusion, said Prime Minister Narendra Modi while launching the service.

PM @narendramodi launches #IndiaPostPaymentsBank ????mobile app pic.twitter.com/fPC9P9KAJ1

— PIB India (@PIB_India) September 1, 2018

The number of rural branches in the country will increase from the current 49,000 to more than 1.75 lakhs.

Payments banks can accept deposits of up to Rs 1 lakh per account from individuals and small businesses. They can also provide RTGS, NEFT, IMPS transactions and transfer and receive money from any bank account. There will be no charges for the transaction as well as a burden to maintain the minimum balance in the account.

According to IPPB, all the 1.55 lakh post offices in India will be linked to India Post Payments Bank by December 31. The move is aimed to penetrate and reach rural India via the postal department's massive network, including 1.7 lakh postmen who will be given hand-held devices to help people access their accounts. About 11,000 postmen both in rural and urban areas will provide doorstep banking services.

India Post Payments Bank will offer a range of products such as savings and current accounts, money transfer, direct benefit transfers, bill and utility payments, and enterprise and merchant payments.

After Airtel, Paytm Jio, and Fino, IPPB is the fifth firm to go live with payments bank permit. Earlier, this week the Cabinet had approved 80 per cent increase in spending for IPPB to Rs 1,435 crore for this project to fight Airtel and Paytm payment banks.

Given 17.5 crore postal savings bank (PSB) accounts will be linked with India Post Payments Bank accounts, it will have edge over others. IPPB has also tied up with third-party and Punjab National Bank to provide loan to farmers and poor people.

In the past months, the RBI has become very strict against payments banks regarding KYC and data security. Following an audit in June by RBI, Paytm Payments Bank was asked to not enrol new customers. Airtel Bank too after ten months of trouble was allowed to enrol new customer from July.