India Post Payments Bank (IPPB)

2021 JUL 10

Preliminary   > Economic Development   >   Miscellaneous   >   NBFCs and other banking

Why in news?

  • India Post Payments Bank Ltd., recently began to offer door step delivery of insurance services on a trial basis in Uttar Pradesh.

What is the India Post Payments Bank (IPPB)?

  • IPPB is a Public Sector Bank established with the objective of being present in all corners of India.
  • It has been incorporated under the Department of Posts (Ministry of Communication & Technology) with 100% equity with Government of India.

Objectives:

  • Make banking a simple, affordable and convenient experience for Indians across the nation.
  • Inclusive banking - promote smart saving and investment habits.
  • Efficient banking services through digital channels like mobile, UPI, debit cards which can be used at ATMs, PoS and mobile-PoS.

Services offered:

  • Banking Services through both Current and Savings Accounts.
  • Domestic Remittance Services via NEFT (National Electronic Funds Transfer), IMPS (Immediate Payment Service), AEPS (Aadhaar Enabled Payment System), UPI (Unified Payment Interface) and USSD Payments.
  • Direct Benefits Transfer.
  • Doorstep Banking with the wide network of post offices and postal employees.
  • Third party financial services like insurance, mutual funds, pension, credit products, forex etc.
  • Being a payment bank IPPB cannot issue credit cards and cannot grant loan/ credit out of their own books of accounts.

What is a Payment Bank?

  • Payments banks are a type of differentiated bank introduced by the RBI for promoting financial inclusion and facilitating payments and remittance flows.
  • Payments banks can concentrate in only two types of activities – accepting demand deposits and facilitating payments.
  • They operates on a smaller scale without involving any credit risk.
  • They can provide payments and remittance services through various channels, issue ATM and Debit cards, net banking, third party fund transfers and distribute non-risk sharing simple financial products like mutual fund units and insurance products, etc.
  • Payments bank cannot undertake lending activities - cannot issue loans and credit cards.
  • 25% of its branches must be in the unbanked rural area.
  • They also need to maintain Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) (75%) requirements.
  • Foreign shareholding will be allowed in these banks as per the rules for FDI in private banks.
  • It cannot form subsidiaries to undertake non-banking activities.

Prelims Question

Consider the following statements about India Post Payment Bank (IPPB):
1.India Post Payments Bank has been incorporated as a public sector company under the department of posts.
2.It will issue credit cards, debit cards and insurance products.
Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2

Answer to the Prelims Question
 


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