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India Posts Payments Bank to offer financial services via third parties

India Posts Payments Bank (IPPB) will partner with Punjab National Bank (PNB) to sell loans, Bajaj Allianz to offer insurance services and is in talks with the State Bank of India (SBI) to provide loans and mutual funds services, reports the Financial Express. MediaNama has reached out to the IPPB for a comment and will update this report if we hear from them.

According to the Reserve Bank of India’s regulations, payment banks cannot undertake lending activities. However, it remains unclear if a payments bank can offer these services in partnership with another (commercial) bank, as is the case with IPPB. 

The IPPB has a provision under which whenever a deposit in an account exceeds Rs 1 lakh, it will be transferred to a Post Office Saving Banks (POSB), according to reports. It has received permission to link around 17 crore POSB accounts. As per RBI’s operating guidelines for payments banks, the aggregate limit for customers in their bank accounts should not exceed Rs 1 lakh. The central bank recently barred Fino Payments Bank from onboarding new customers after noticing that some customers deposited amounts exceeding Rs 1 lakh in their accounts.

Set for launch

Prime Minister Narendra Modi will launch IPPB this month. Operations will commence in 650 branches with at least one branch located in every district of the country. IPPB will focus on delivering financial services, particularly in rural areas by leveraging its massive network of 155,000 post office branches in the country. According to some reports, the government is trying to link all post office branches in the country with IPPB services by the end of this year, which would make the body India’s largest banking network.

The IPPB app, possibly to be launched on the same day as the bank, will enable customers to pay for hone recharges and bill, electricity bill, DTH service, college fees, etc., on the Bharat Bill payments system (BBPS) of the National Payments Corporation of India (NPCI). The payments bank will also offer RTGS, NEFT, IMPS transactions to transfer and receive money from any bank account. On the flip side, the government will use the payments bank to distribute MGNREGA wages, subsidies, pension, etc.

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In its ‘doorstep banking’ initiative, IPPB will deploy around 300,000 postmen, who upon a request by an account holder, will visit their homes and, through PoS machine, provide banking services. There will be a charge of Rs 15 per transaction on cash deposits and withdrawals of upto Rs 2,000; Rs 25 for transactions above Rs 2,000 but below Rs 5,000, and Rs 35 for transactions from Rs 5,000 – Rs 10,000, according to a report by the Mint. Cash transactions above Rs 10,000 will not be offered through doorstep banking, the report said.

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