Indian Post Payment Bank (IPPB)

Why in news?

• Indian Post Payment Bank (IPPB) has marked a significant milestone in the world of banking services with its continued profit streak, demonstrating its commitment to sustainable financial inclusion and citizen empowerment.
• IPPB on August 22,2023 reported its first-ever operational profit of Rs 20.16 crore for 2022-23. The bank saw a 66.12% growth in overall revenue.

About India Post Payments Bank (IPPB):

• It is a Payments Bank of the Indian postal department which works through a network of post offices.
• It has been incorporated under the Department of Posts (Ministry of Communication & Technology) with 100% equity with Government of India.
• It is governed by the Reserve Bank of India (RBI).
• Services offered:
  • Banking Services through both Current and Savings Accounts.
  • Domestic Remittance Services via NEFT, IMPS, AEPS (Aadhaar Enabled Payment System), UPI (Unified Payment Interface) etc.
  • Being a payment bank IPPB cannot issue credit cards and cannot grant loan/ credit out of their own books of accounts.
  • 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.

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 operate 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.

PRACTICE 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