Seeping in banking benefits at rural areas, India Post Payment Banks to be operational from May

Bhopal, April 30: Communication has become quite easy and enabling services that will help easy accessibility to people is what the current government aims at. Availing people with easy banking services, that the launch of the postal department’s payments bank would enable more than 1.5 lakh post offices to become access points for people. Union Minister of State for Communications Manoj Sinha said that as many as 650 branches of the India Post payments bank are likely to be operational across the country by May.

Last year on January 30, 2017, India Post Payments Bank (IPPB) kicked off its operations by rolling out pilot services in Raipur and Ranchi, the capitals of Chhattisgarh and Jharkhand respectively. The second payments bank to start operations after Airtel Payments Bank, IPPB received a licence from the Reserve Bank of India (RBI) on January 20, 2017.

Becoming a game changer, the Indian Post Payment banks will help the rural area people to enable transfer money through postal services. Payment banks can also play a crucial role in implementing the government’s direct benefit transfer scheme, where subsidies on healthcare, education and gas are paid directly to beneficiaries’ accounts.

So what are Payments Banks?

These payment banks will accept deposits restricted to Rs.1 Lakh per customer and will be allowed to pay customers interest on money that is been deposited. They can be used for either current accounts or savings accounts. These small no-frills banks are expected to reach customers mainly through their mobile phones rather than traditional bank branches.

The RBI guidelines say that payment bank licenses would be granted to mobile firms, supermarket chains, and others, to cater to individuals and small businesses. The goal is to provide basic financial services, including payments of all sorts, social security and utility bill payments, remittance services, current and saving accounts with a balance of up to Rs1 lakh.

Sighting the postal department entering into banking when the sector itself was struggling hard, Manoj Sinha said that since the post offices have greater presence in rural and remote areas than the banks, the department hopes that we would be able to provide better banking services to people and also open new avenue for generating revenue.

India Post had been adopting new technology in a bid to provide services at a faster pace and, as part of it, postmen were being provided with smart phones and hand held devices. Speaking about Passport Seva Kendras (PSK) operating at post offices, the minister said that over seven lakh passport applications had been processed through 187 PSK. There are seven PSK working in Madhya Pradesh Vidisha, Satna, Jabalpur, Dewas, Balaghat and Gwalior, three more will be opened at Damoh, Hoshangabad and Ratlam.

Payment Bank can and can’t do:

They can enable transfers and remittances through a mobile phone.

They can offer services such as automatic payments of bills, and purchases in cashless, chequeless transactions through a phone.

They can issue debit cards and ATM cards usable on ATM networks of all banks.

They can transfer money directly to bank accounts at nearly no cost, being a part of the gateway that connects banks.

They can provide forex cards to travellers, usable again as a debit or ATM card all over India.

They can offer forex services at charges lower than banks.

They can also offer card acceptance mechanisms to third parties such as the “Apple Pay.”

They can’t offer loans but can raise deposits of upto Rs1 lakh, and pay interest on these balances just like a savings bank account does.

Unlike a regular bank, a payment bank can’t issue credit cards and is only allowed to invest the money customers deposit into government securities.

The Union Minister of Communication further said that the department has formed separate Parcel Directorate to give a boost to this segment, adding that it will give tough competition to the private players and help the to generate revenue. Clarifying that there is no lack of man force in the department, the minister said that around 5000 recruitment have been made and 3500 persons will be appointed.