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