All post offices at 1.55 lakh will offer payment banking service

India Post Payments Bank is preparing to provide its financial services through all 1.55 lakh post offices and 3 lakh employees by the end of 2018 which will create India’s second largest payment bank in terms of range. “We will have a bank footprint in each district by March 2018, and before the end of the calendar year, all post offices at 1.55 lakh and each postman and grameen dak sevak, i.e. 3 additional lakh, will be equipped of a device that will provide a full range of payment solutions that we will host, ”AP Singh, CEO of India Post Payments Bank (IPPB), said at a United Nations event on financial inclusion. In the private space, Airtel Payments Bank, launched in January this year, started operations with a 2.5 lakh merchant network.

Payment banks can accept deposits of up to Rs 1 lakh per account from individuals and small businesses. The new banking model enables mobile businesses, supermarket chains and others to meet the banking needs of individuals and small businesses. It will be established as a differentiated bank and will limit its activities to accepting sight deposits, money transfer services, internet banking and other specified services.

IPPB offers an interest rate of 4.5% on deposits up to Rs 25,000, 5% on Rs 25,000 to Rs 50,000 and 5.5% on Rs 50,000 to 1,000,000. “While our counterparts from the private sector are going, I take it very positively, to ride the market from the top, you need someone who works from the bottom up. It’s our choice, ”Singh said. He said that like the State Bank of India which was established to provide banking services to people, IPPB will bring digital payments to the masses.

At the event, the Chairman of the Telecommunications Regulatory Authority of India, RS Sharma, said that the transaction cost on digital payment should be very minimal and it should be made affordable. IPPB, according to Singh, will use Aadhaar as an individual’s payment address, indicating that the postal bank can reduce the transaction fee to close to 1 paisa. “We are going to convert it (Aadhaar) into a payment address. We will enable this by offering a multitude of payment services, ”Singh said.

“We took up the challenge of how to make a Rs 10 transaction viable. Aadhaar authentication costs less than 1 paisa. There is no reason for a payment transaction to process anything else, ”Singh said.

Right now, private players and even public banks charge transaction fees even on digital payments, depending on the nature of the transaction.