PM launches India Post Payments Bank aimed at financial inclusion

Prime Minister Narendra Modi on Saturday launched the India Post Payments Bank (IPPB), a new initiative aimed at expanding access to banking services in rural and underserved parts of the country.

The payments bank will initially offer savings and current account facilities through 650 post offices and 3,250 access points. The government plans to significantly expand the network by the end of 2018, taking the number of access points to 1.55 lakh, including around 1.30 lakh in rural areas.

Speaking at the launch, Modi said IPPB would strengthen the process of financial inclusion that received a major push with the launch of the Pradhan Mantri Jan Dhan Yojana in 2014.

He highlighted the extensive reach of India's postal network, which has around 1.5 lakh post offices and more than three lakh postmen. According to the Prime Minister, technology would allow this vast network to function as an important channel for delivering banking services to people who have traditionally had limited access to formal financial institutions.

Postmen will be equipped with smartphones and digital devices to provide banking-related services closer to people's homes, particularly in rural areas.

Modi said farmers and daily wage workers could be among the major beneficiaries of the new system. Payments and claims linked to schemes such as the Pradhan Mantri Fasal Bima Yojana and the Mahatma Gandhi National Rural Employment Guarantee Scheme could be transferred through IPPB accounts.

Communications Minister Manoj Sinha said customers would be able to open accounts quickly using Aadhaar-based identification. Transactions could also be carried out through QR cards, reducing the need for customers to remember account numbers and passwords.

Existing Post Office Savings Bank customers would also be able to access IPPB services by linking their existing accounts with the payments bank.

As payments banks are not permitted by the Reserve Bank of India to directly provide loans and insurance, IPPB has entered into an arrangement with Punjab National Bank. Under the partnership, IPPB will act as an agent to facilitate loans for its customers. The loans will carry the interest rates charged by PNB, while IPPB will not levy a commission for providing the service.

IPPB will offer a range of services, including savings and current accounts, domestic remittances, money transfers, direct benefit transfers and payments for businesses and merchants.

Customers will be able to access these services through several channels, including post office counters, micro ATMs, mobile banking applications, SMS and Interactive Voice Response (IVR) services.

The launch marked a significant attempt to use India's postal infrastructure as a last-mile banking network, particularly in villages and remote areas where conventional bank branches may not be easily accessible.