FREQUENTLY ASKED QUESTION ON IPPB
Concept of Payments Bank
1. What is a Payments Bank?
A Payments Bank is a “differentiated bank” set-up under the guidelines
issued on Nov 27, 2014 by the Reserve Bank of India (RBI) to further
financial inclusion for the underserved population by providing (i)
current and savings accounts and (ii) payments or remittance services
to migrant labour workforce, low income households, small businesses,
unorganised sector entities and other users. This is to be done by
enabling high volume-low value transactions in deposits and
payments or remittance services in a secure technology-driven
environment.
issued on Nov 27, 2014 by the Reserve Bank of India (RBI) to further
financial inclusion for the underserved population by providing (i)
current and savings accounts and (ii) payments or remittance services
to migrant labour workforce, low income households, small businesses,
unorganised sector entities and other users. This is to be done by
enabling high volume-low value transactions in deposits and
payments or remittance services in a secure technology-driven
environment.
Please click on this link for further details:
https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=32615
(RBI Guidelines)
(RBI Guidelines)
2. Why is a Payments Bank required?
A vast majority of the rural population (over 60%, as per RBI),
is still unbanked or underbanked. An easily accessible payments
network and universal access to savings is fundamental to financial
inclusion. At the same time, several non-banking entities such as
the Department of Posts (DoP), prepaid payment instrument
companies, business correspondent companies, etc., have had
reasonable success in facilitating payments and other select financial
services in urban areas. Their customers, however, face several
limitations and difficulties arising out of their nonbanking status.
Of particular note amongst these is the DoP which has a wide
network and experience of handling financial transactions, but
does not have a banking license. Given their potential to further
the cause of financial inclusion, the RBI granted such entities a
differentiated banking license, i.e. a payments bank license,
which enables these entities to provide banking services
other than credit. Credit and insurance are as integral to
financial inclusion as are other banking services, and payments
bank can offer these products as well but only in partnership
with other banks/ insurers and on a non-risk sharing basis.
is still unbanked or underbanked. An easily accessible payments
network and universal access to savings is fundamental to financial
inclusion. At the same time, several non-banking entities such as
the Department of Posts (DoP), prepaid payment instrument
companies, business correspondent companies, etc., have had
reasonable success in facilitating payments and other select financial
services in urban areas. Their customers, however, face several
limitations and difficulties arising out of their nonbanking status.
Of particular note amongst these is the DoP which has a wide
network and experience of handling financial transactions, but
does not have a banking license. Given their potential to further
the cause of financial inclusion, the RBI granted such entities a
differentiated banking license, i.e. a payments bank license,
which enables these entities to provide banking services
other than credit. Credit and insurance are as integral to
financial inclusion as are other banking services, and payments
bank can offer these products as well but only in partnership
with other banks/ insurers and on a non-risk sharing basis.
3. What is the scope and activities of the Payments Bank?
As per the RBI Guidelines, the payments bank will be set up
as a differentiated bank and shall be permitted to set up its
own outlets such as branches, Automated Teller
Machines (ATMs), Business Correspondents (BCs), etc. to undertake
only certain restricted activities permitted to banks under the Banking
Regulation Act, 1949, as given below:
as a differentiated bank and shall be permitted to set up its
own outlets such as branches, Automated Teller
Machines (ATMs), Business Correspondents (BCs), etc. to undertake
only certain restricted activities permitted to banks under the Banking
Regulation Act, 1949, as given below:
- Acceptance of demand deposits, i.e., current deposits, and
- savings bank deposits from individuals, small businesses
- and other entities, as permitted. The payments bank will
- be restricted to holding a maximum balance of Rs. 1,00,000
- per individual customer.
- Issuance of ATM / Debit Cards. Payments banks, however, cannot
- issue credit cards.
- Payments and remittance services through various channels
- including branches, Automated Teller Machines (ATMs),
- Business Correspondents (BCs) and mobile banking.
- Issuance of PPIs as per instructions issued from time to time
- under the PSS Act.
- Internet and mobile banking - The payments bank is expected to
- leverage technology to offer low cost banking solutions.
- Functioning as Business Correspondent (BC) of another bank – a
- payments bank may choose to become a BC of another bank,
- subject to the RBI guidelines on BCs.
- As a channel, the payments bank can accept remittances to
- be sent to or receive remittances from multiple banks under a
- payment mechanism approved by RBI, such as RTGS / NEFT / IMPS.
- Payments banks will be permitted to handle cross border remittance
- transactions in the nature of personal payments or remittances
- on the current account.
- Payments banks can undertake other non-risk sharing simple
- financial services activities, not requiring any commitment of their
- own funds, such as distribution of mutual fund units, insurance
- products, pension
- products, etc. with the prior approval of the RBI and after
- complying with the requirements of the sectoral regulator for
- such products.
The payments bank may undertake utility bill payments etc. on behalf
of its customers and general public.
of its customers and general public.
Please click on this link for further details:
https://rbi.org.in/scripts/bs_viewcontent.aspx?Id=2900
(RBI Guidelines)
https://rbi.org.in/scripts/bs_viewcontent.aspx?Id=2900
(RBI Guidelines)
4. Are there any restrictions on payments banks as compared
to other commercial banks?
to other commercial banks?
Given that their primary role is to provide payments and
remittance services and demand deposit products to small businesses
and low-income households, payments bank will initially be restricted
to holding a maximum balance of Rs. 1,00,000 per individual customer.
remittance services and demand deposit products to small businesses
and low-income households, payments bank will initially be restricted
to holding a maximum balance of Rs. 1,00,000 per individual customer.
Payments banks cannot issue credit cards and cannot grant
loan/ credit out of their own books of accounts.
loan/ credit out of their own books of accounts.
Apart from amounts maintained as Cash reserve ratio (CRR)
with RBI, Payments Bank will be required to invest minimum
75 percent of its demand deposit balances in Government
securities/treasury bills with maturity up to one year and
hold maximum 25 percent in current and fixed deposits with
other scheduled commercial banks for operational purposes and
liquidity management.
with RBI, Payments Bank will be required to invest minimum
75 percent of its demand deposit balances in Government
securities/treasury bills with maturity up to one year and
hold maximum 25 percent in current and fixed deposits with
other scheduled commercial banks for operational purposes and
liquidity management.
The payments bank cannot set up subsidiaries to undertake
non-banking financial services activities. The other financial
and non-financial services activities of the promoters, if any,
should be kept distinctly ring-fenced and not comingled with
the banking and financial services business of the payments bank.
non-banking financial services activities. The other financial
and non-financial services activities of the promoters, if any,
should be kept distinctly ring-fenced and not comingled with
the banking and financial services business of the payments bank.
The payments bank will be required to use the words “Payments
Bank” in its name in order to differentiate it from other banks.
Bank” in its name in order to differentiate it from other banks.
5. Has this model of Post office setting up a bank worked anywhere
else in the world?
else in the world?
Postal operators are the leading financial services providers in
over 75% of the countries around the world. Some of the Post Banks
in the world have been highly successful, i.e. Japan, New Zealand,
Switzerland, France, China, South Korea, South Africa, Morocco
to name a few.
over 75% of the countries around the world. Some of the Post Banks
in the world have been highly successful, i.e. Japan, New Zealand,
Switzerland, France, China, South Korea, South Africa, Morocco
to name a few.
Department of Post
6. Why is DoP setting-up a payments bank?
DoP has been successfully running the Post Office Savings Bank for the
Ministry of Finance. Setting up its independently owned bank is the next
logical progression. Based on feasibility studies and a subsequent Detailed
Project Report, the Department, in 2013, made an application to the RBI
and a proposal to the Public Investment Board (PIB) to set up a universal
bank. However, the Department was advised by the PIB to set up a “
differentiated bank” under the relevant guidelines. Accordingly when the
RBI came up with the guidelines for licensing of Payments Banks in
November 2014, the Department of Posts made an application for
the same and got the in-principle approval in September 2015 for
setting up its payments bank.
Ministry of Finance. Setting up its independently owned bank is the next
logical progression. Based on feasibility studies and a subsequent Detailed
Project Report, the Department, in 2013, made an application to the RBI
and a proposal to the Public Investment Board (PIB) to set up a universal
bank. However, the Department was advised by the PIB to set up a “
differentiated bank” under the relevant guidelines. Accordingly when the
RBI came up with the guidelines for licensing of Payments Banks in
November 2014, the Department of Posts made an application for
the same and got the in-principle approval in September 2015 for
setting up its payments bank.
The setting up of the payments bank is therefore necessary in
view of current market realities and to ensure continued relevance
of DoP’s products and services. Among other things, the decision to
set up the payments banks comes in the wake of changes in the
banking and payments landscape in the country. The payments
bank will ensure that the banking and payments services offered
through the postal network are well integrated and completely
interoperable with the rest of the banking and payments ecosystem
and will leverage new age technology in line with key technological
advances in the banking sector such as unified payments interface (UPI).
view of current market realities and to ensure continued relevance
of DoP’s products and services. Among other things, the decision to
set up the payments banks comes in the wake of changes in the
banking and payments landscape in the country. The payments
bank will ensure that the banking and payments services offered
through the postal network are well integrated and completely
interoperable with the rest of the banking and payments ecosystem
and will leverage new age technology in line with key technological
advances in the banking sector such as unified payments interface (UPI).
7. What is the GOI’s outlook on DoP’s foray into banking?
In the Union Budget of 2015-16, the Honourable Finance Minister
made the following announcement:
made the following announcement:
“The Government is committed to increasing access of the people
to the formal financial system. In this context, Government proposes
to utilize the vast Postal network with nearly 1, 54,000 points of presence
spread across the villages of the country. I hope that the Postal Department
will make its proposed Payments Bank venture successful so that it
contributes further to the Pradhan Mantri Jan Dhan Yojana.”
to the formal financial system. In this context, Government proposes
to utilize the vast Postal network with nearly 1, 54,000 points of presence
spread across the villages of the country. I hope that the Postal Department
will make its proposed Payments Bank venture successful so that it
contributes further to the Pradhan Mantri Jan Dhan Yojana.”
In his Independence Day speech at the Red Fort, on 15th August 2016,
the Hon’ble Prime Minister Shri Narendra Modi spoke about IPPB:
the Hon’ble Prime Minister Shri Narendra Modi spoke about IPPB:
“The Post Office is an example of our identity. We have revived and
rejuvenated our post offices. IT is now linked with the poor and
small persons. If any government representative gets the affection
of a common man in India, it is the postman. Everyone loves the
postman and the postman also loves everybody, but we never paid
attention towards them. We have taken a step to convert our
post offices into payments banks. Starting with this, the payments
bank will spread the chain of banks in the villages across the country
in one go”
rejuvenated our post offices. IT is now linked with the poor and
small persons. If any government representative gets the affection
of a common man in India, it is the postman. Everyone loves the
postman and the postman also loves everybody, but we never paid
attention towards them. We have taken a step to convert our
post offices into payments banks. Starting with this, the payments
bank will spread the chain of banks in the villages across the country
in one go”
8. How will setting up the payments bank benefit DoP?
The payments bank will not only drive revenues for DoP but
also help in maintaining DoP’s brand image and relevance in the
current financial landscape that is evolving rapidly. For e.g. Utility
bill payments services of the IPPB as a Bharat Bill Payment Operating
Unit (BBPOU) will help DoP in increasing its market share in the utilit
bill payments space and provide technology driven services to
customers. New age technology will enhance customer experience,
provide more options and help in serving the larger cause and vision of
the GOI i.e. to bring about financial inclusion for the vast unbanked
and underserved population.
also help in maintaining DoP’s brand image and relevance in the
current financial landscape that is evolving rapidly. For e.g. Utility
bill payments services of the IPPB as a Bharat Bill Payment Operating
Unit (BBPOU) will help DoP in increasing its market share in the utilit
bill payments space and provide technology driven services to
customers. New age technology will enhance customer experience,
provide more options and help in serving the larger cause and vision of
the GOI i.e. to bring about financial inclusion for the vast unbanked
and underserved population.
9. What will be the role and relationship of DoP with the proposed payments bank?
The payments bank will be 100% owned by the Government of India via DoP,
and will have an independent board of directors with representation from
DoP and other stakeholders from within the Government of India to
ensure strategic alignment with the overall objectives of the DoP and the
Government of India.
and will have an independent board of directors with representation from
DoP and other stakeholders from within the Government of India to
ensure strategic alignment with the overall objectives of the DoP and the
Government of India.
The post offices at different levels will be the main customer touch
points for the bank’s services. A close liaison between the bank and
DoP staff at the access points will be maintained on a regular basis at
the branch level for success of the delivery model .
points for the bank’s services. A close liaison between the bank and
DoP staff at the access points will be maintained on a regular basis at
the branch level for success of the delivery model .
India Post Payment Bank (IPPB)
11. How many branches are likely to be opened?
IPPB is slated to have 650 branches at district headquarters.
All post offices across the country will function as customer access points for IPPB.
All post offices across the country will function as customer access points for IPPB.
12. What will be the USP for IPPB?
The latest payments and banking technology, easy to use interface,
the trusted network of the post office and its dedicated staff with a local connect
will be the USP of the IPPB. IPPB will bring in innovative services and interface
for its target customer segments in all areas. The accessibility and ease of use
of services through a combination of modern technology and the widespread
DoP physical network, capable of providing door step services will make
it a unique payments bank. Through a combination of physical and
digital channels, payments bank will build the most accessible bank in the
country especially in rural and underserved areas of the country.
the trusted network of the post office and its dedicated staff with a local connect
will be the USP of the IPPB. IPPB will bring in innovative services and interface
for its target customer segments in all areas. The accessibility and ease of use
of services through a combination of modern technology and the widespread
DoP physical network, capable of providing door step services will make
it a unique payments bank. Through a combination of physical and
digital channels, payments bank will build the most accessible bank in the
country especially in rural and underserved areas of the country.
13. How will IPPB employees be recruited? What are the various mechanisms
through which they get selected?
through which they get selected?
Various options regarding the recruitment and selection of IPPB
employees
have been considered. These include deputation from DoP or other public
sector banks, direct recruitment through IBPS, contractual arrangements for
certain skilled staff positions etc.
have been considered. These include deputation from DoP or other public
sector banks, direct recruitment through IBPS, contractual arrangements for
certain skilled staff positions etc.
DoP’s role in IPPB
14. How will IPPB function?
IPPB has been set up as a Public Limited Company under the Department
of Posts with an independent Board of Directors. It will be headed by a
Managing Director and CEO, and will set up a corporate head quarter
and approx. 650 branches to manage its functions on a day to day basis.
IPPB will leverage the physical and IT infrastructure of the Post office
and be set up on a lean operating model. It will focus on low-cost,
low-risk, technology led solutions to extend access to formal banking.
of Posts with an independent Board of Directors. It will be headed by a
Managing Director and CEO, and will set up a corporate head quarter
and approx. 650 branches to manage its functions on a day to day basis.
IPPB will leverage the physical and IT infrastructure of the Post office
and be set up on a lean operating model. It will focus on low-cost,
low-risk, technology led solutions to extend access to formal banking.
Products and Services
15. How will the products and services of IPPB be different from
DoP’s payment and remittance products?
DoP’s payment and remittance products?
DoP payments and remittances products are based on the basic money
order services adapted for the digital age. While IPPB will provide the
same benefits of payments and remittances to the customers, by adopting
newer, efficient processes and technologies such as mobile based payments,
digital wallets and innovative payment and remittance products that
are continuously emerging in the market today. Combined with
doorstep banking transactions and easy to use mobile and internet
banking options IPPB will significantly improve accessibility of its
services. Additionally, IPPB products will be well integrated and
inter-operable with the rest of the banking industry.
order services adapted for the digital age. While IPPB will provide the
same benefits of payments and remittances to the customers, by adopting
newer, efficient processes and technologies such as mobile based payments,
digital wallets and innovative payment and remittance products that
are continuously emerging in the market today. Combined with
doorstep banking transactions and easy to use mobile and internet
banking options IPPB will significantly improve accessibility of its
services. Additionally, IPPB products will be well integrated and
inter-operable with the rest of the banking industry.
IPPB will drive the benefits of financial inclusion by bringing a host
of financial products to suit the needs of different strata of society
with special focus on the marginalized sections and citizens in rural areas.
of financial products to suit the needs of different strata of society
with special focus on the marginalized sections and citizens in rural areas.
Product innovation will be a continuous exercise to expand the bouquet
of services adapting to the evolving needs of its customers technologies
and the rapid advancements in communication and payments
of services adapting to the evolving needs of its customers technologies
and the rapid advancements in communication and payments
16. Will there be an impact on POSB?
Apart from savings account with up to INR 1,00,000 in deposit, the
products offered by IPPB are different from POSB products. POSB
savings accounts do not have any ceiling limit unlike payments bank
savings account. On the other hand payments banks can offer current
accounts for use by businesses and institutions whereas POSB does not
offer these accounts. Other kinds of deposits under POSB are unique to
it and will not be on offered by the payments bank. POSB accounts
are mainly savings instruments.
products offered by IPPB are different from POSB products. POSB
savings accounts do not have any ceiling limit unlike payments bank
savings account. On the other hand payments banks can offer current
accounts for use by businesses and institutions whereas POSB does not
offer these accounts. Other kinds of deposits under POSB are unique to
it and will not be on offered by the payments bank. POSB accounts
are mainly savings instruments.
Simply put while POSB is more focussed on returns from small savings,
IPPB will be focussed on transactions. Thus there will be an inherent
synergy between the two and each will complement the other.
IPPB will be focussed on transactions. Thus there will be an inherent
synergy between the two and each will complement the other.
17. How will IPPB improve disbursement of subsidies?
IPPB is being set up by the GoI with a primary focus of improving
the Direct Benefit Transfer of various subsidies. IPPB will be providing
a robust technology platform for DBT disbursements and build
a strong reporting mechanism. By channelling a majority of subsidy
disbursements through its combined network, DoP-IPPB combine
will significantly increase its current market share.
the Direct Benefit Transfer of various subsidies. IPPB will be providing
a robust technology platform for DBT disbursements and build
a strong reporting mechanism. By channelling a majority of subsidy
disbursements through its combined network, DoP-IPPB combine
will significantly increase its current market share.
Customers
18. Who will be the target customer of IPPB?
Apart from the existing customers of the DoP, IPPB will focus on the
underbanked and unbanked population in different parts of the country.
It will also try to target services for MSMEs, senior citizens, students,
migrant population, low income households, unorganized sector and other
groups with special service requirements.
underbanked and unbanked population in different parts of the country.
It will also try to target services for MSMEs, senior citizens, students,
migrant population, low income households, unorganized sector and other
groups with special service requirements.
19. How will the customer choose between the savings account of
POSB and IPPB?
POSB and IPPB?
Both POSB and IPPB will have different branding and the product
features will be quite different. At time of signing up, customers will
be clearly told what the product features are and customers will
be able to choose the product of their choice.
features will be quite different. At time of signing up, customers will
be clearly told what the product features are and customers will
be able to choose the product of their choice.
Given the difference in purpose of the two accounts, the POSB customers
can be encouraged to open an IPPB account for managing their fund
flow including bill payments, remittances to other family members,
businesses etc. depending on their needs. Customers focusing on savings
may prefer to have their deposits with POSB and transact through their
IPPB account as per requirements.
can be encouraged to open an IPPB account for managing their fund
flow including bill payments, remittances to other family members,
businesses etc. depending on their needs. Customers focusing on savings
may prefer to have their deposits with POSB and transact through their
IPPB account as per requirements.
Customers will be given the option to channel money from their IPPB
accounts to any of the POSB schemes. For example, an IPPB customer
will be able to use money in his account to open and service a RD/ TD/ SSY
or any other POSB account. Thus both IPPB and POSB can synergistically
serve the customers.
accounts to any of the POSB schemes. For example, an IPPB customer
will be able to use money in his account to open and service a RD/ TD/ SSY
or any other POSB account. Thus both IPPB and POSB can synergistically
serve the customers.
Overall
20. I would like to know more and contribute to the IPPB journey.
How can I do that?You can send your questions and suggestions to
pbi-project(at)gov.in or call us at +91 11 23096008 and
check for regular updates on
https://www.facebook.com/ippbonline/ and http://utilities.cept.gov.in/dop.
How can I do that?You can send your questions and suggestions to
pbi-project(at)gov.in or call us at +91 11 23096008 and
check for regular updates on
https://www.facebook.com/ippbonline/ and http://utilities.cept.gov.in/dop.
Courtesy: IPPB
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