Government-owned India Post Payments Bank has decided to change its future course by converting to a small finance bank. With this, the postal department aims to offer small loans to customer and open one crore bank accounts in 100 days.
The announcement came as a part of the heads of circles conference held at Srinagar, Jammu and Kashmir, from July 29-31, 2019. The conference was to adopt a 100-day action plan and a five-year vision to align the department of posts with the Prime Minister’s New India initiative.
The decision to convert to small finance bank will work towards providing micro credit at the doorsteps to individuals and SMEs. India Post will partner with common service centres under Digital India programme to provide a suite of citizen centric services such as banking, remittance, insurance, DBT, bill and tax payments etc at post offices.
A payments bank can accept deposits of up to INR 1 lakh, offer remittance services, mobile payments or transfers or purchases and other banking services like ATM/debit cards, net banking and third party fund transfers but cannot advance loans or issue credit cards.
At the same time, banks with a small finance bank license can provide basic banking service of acceptance of deposits and lending. RBI has till date approved 10 small finance banks which include Au Small Finance Bank, Equitas Small Finance Bank, Ujjivan Small Finance Bank among others.
Launched in 2018, India Post Payments bank was the sixth RBI-approved payments bank. IPPB’s target customers are senior citizens, students, homemakers, urban migrants, farmer, direct benefit transfer (DBT) beneficiaries, rural influencers, kirana stores and small businesses. The move is aimed at leveraging the reach of India Post, that has 1.55 lakh branches across the country, to provide banking and financial service to people in far-flung areas.
At the time of the launch, the government expected IPPB to turn profitable in two years. Recently, the Ministry of Electronics and Information Technology data showed that India Post Payments Bank could achieve only 0.14% of the target given for digital transactions.
With the change in the future plans, telecom minister Ravi Shankar Prasad urged the heads of circles to leverage technology to strengthen Digital India by adopting AI, IoT and cloud computing for citizen-centric services.