By Mohd. Taraq Junaid
Last week, India Post became the first government owned organisation to receive the permission from the Reserve Bank of India to initiate its own payment bank services within the country.
Following Airtel and Paytm, India Post is the third organisation to have received the license from the Central Bank.
Mr. AP Singh has been appointed by the government as the interim CEO and MD of the India Posts Bank Service to setup the operational facilities. Mr. Singh, a 1986 batch Indian Postal Service Officer has earlier served in the Department of Disinvestment as a joint secretary and has played a key role in the launch of Aadhaar and E-KYC system.
Mr. AP Singh has been appointed interim CEO and MD of India Posts Bank Service to set up operational facilities. | Photo Courtesy: The HinduOf the 11 entities granted permission by the RBI, last year, to start their payment bank services, three have received the final permit until now. Airtel Banks, started by telecom giant Bharti Airtel, rolled out their commercial services with an initial investment of 3,000 crore offering an attractive interest rate of 7.25% on deposits compared to 4% and less in all the other major banks in the country. Paytm, the domestic e-commerce and digital payment platform, plans to roll out its services in March, 2017 with an initial investment of 400 crores. It aims to offer banking and financial services to the millions of unserved people in the country.
[su_pullquote]India Posts plans to equip all the post offices in the country with the payment bank services facility.[/su_pullquote]
India Posts plans to equip all the post offices in the country with the payment bank services facility. While Airtel and Paytm will target urban markets, the decade old India Posts plans to target rural markets which form its major customer base. As of March 31st 2015, The Indian Postal Service had 1,54,939 post offices of which 89.86% were in rural areas and 10.14% in urban areas. To kick-start the facility, it plans to open 650 new branches for the payment banks at existing post offices.
The main objective of setting up payment banks was to further financial inclusion. According to the RBI regulations for payment banks, 25% of the branches should be in unbanked rural areas. Considering the fact that more than half the population in the country doesnt have easy access to banks, Indian Posts can play a crucial role in encouraging digital payments and tracking money in areas that are often ignored by the universal banks.
The launch of payment banks is also expected to generate substantial employment opportunities.
As per reports, Indian Posts plans to recruit as many as 1,700 managers before launching the commercial operations. Payment banks will be able to accept 1 lakh rupees in deposits from individuals and small businesses. The financial services of these entities will be limited to accepting demand deposits, internet banking, ticketing, bill payments, mobile recharges and remittance services. The RBI has not given these banks the authority to issue credit cards or lend money to individuals or organisations. In a country where computer literacy is a privilege, the fate of digital payment systems completely depends on the simplicity of access and the transparency of commercial operations`.
An India Post Office in Uttarakhand. | Photo Courtesy: India Post Uttarakhand“In a country where computer literacy is a privilege, the fate of digital payment systems completely depends on the simplicity of access and the transparency of commercial operations”