Financial inclusion is the main mission of India Post Payments Bank.

The India Post Payments Bank has been incorporated as a public sector company under the department of posts with 100% government equity and is governed by RBI.

Ahead of the launch of India Post Payments Bank (IPPB) by Prime Minister Narendra Modi on Saturday, the managing director and chief executive officer (CEO) of the bank, Suresh Sethi, spoke about IPPB’s objectives, goals and expansion plans. The bank has been incorporated as a public sector company under the department of posts (DoP) with 100% government equity and is governed by the Reserve Bank of India (RBI). Edited excerpts from an interview:

What is the main aim of setting up IPPB?

We are looking at financial inclusion as the main mission of the bank. Our focus will be on segments that today have challenges in either accessibility or affordability. From a vision perspective, we are looking to bring the most affordable, accessible and trustworthy bank to the last mile consumer.

10 things to know about India Post Payments Bank:

1)India Post Payments Bank has been set up under the Department of Posts, Ministry of Communication, with 100% equity owned by Government of India.

2) It started operations on 30 January, 2017, by opening two pilot branches, one at Raipur and the other at Ranchi.

3) India Post Payments Bank will offer 4 per cent interest rate on savings accounts.

4) Payments banks can accept deposits of up to Rs 1 lakh per account from individuals and small businesses, but do not have the mandate to extend loans.

5) But India Post Payments Bank will, in alliance with other financial service providers, offer third-party products. For example, in case of loans, India Post Payments Bank will work as an agent of PNB.

6) India Post Payments Bank will offer a range of products such as savings and current accounts, money transfer, direct benefit transfers, bill and utility payments, and enterprise and merchant payments.

7) These products, and services, will be offered across multiple channels (counter services, micro-ATM, mobile banking app, SMS and IVR), using the India Post Payments Bank’s technology platform.

8) India Post Payments Bank has been allowed to link around 17 crore postal savings bank (PSB) accounts with its accounts.

9) India Post Payments Bank “has been envisioned as an accessible, affordable and trusted bank for the common man,” the government said in statement. It will leverage the vast network of the Department of Posts, which covers every corner of the country with more than 300,000 postmen and grameen dak sewaks.

10) The Cabinet earlier this week approved an 80% increase in spending for India Post Payments Bank (IPPB) to Rs 1,435 crore. The increase will take the IPPB project outlay to Rs 1,435 crore from Rs 800 crore -- giving it additional firepower to compete in the market with existing operators like Airtel Payments Bank and Paytm Payments Bank.

What are the key focus areas?

The segments that we are looking at specifically include homemakers, senior citizens, urban migrants, people in rural India, including students who come to urban areas for education and need funds. We will also be looking at unorganized retail where payments today are largely dominated in cash. We want to create a less cash system so that kirana stores and merchants would become part of the ecosystem where IPPB accounts can be used and they can interact digitally rather than accepting cash.

How will the bank benefit by operating under DoP?

DoP becomes very critical for bringing a change of this scale because of its huge physical network and human capital. Today, DoP has around 1.55 lakh points of service out of which 1.30 lakh are in rural India. Today there are around 50,000 bank branches all put together. Now, if we look at the fact that we bring in around 1.3 lakh points of service, the rural banking ecosystem will get scaled up by 3.5 times. This brings us to a very different comparison on what we can do for the last mile.

DoP has around 300,000 people out there providing postal services and our mission is to make sure that each of these people also becomes IPPB’s service provider. These are postmen and gramin dak sewaks who will also offer doorstep banking services.

DoP is going to act as our corporate banking correspondent and these will be the last mile service providers.

Any plans to scale up the number of banking agents?

I think this is a big enough number to begin with. Our biggest leverage is going to be able to make each and every of these 300,000 people financially literate to be able to advise somebody about banking services.

There is a huge amount of effort and investment going into training these people as they are now going to function as bank service providers.

What kind of investment will go into training these banking agents?

We are giving these postmen smart phones on which a mobile agent app will be installed and also a biometric device for authentication. All these applications will be connected on real time basis with our core banking system. It will meet the stringent RBI guidelines to make sure that each transaction is online. We have invested in very high-end technology capability to make sure that our applications are simple, intuitive and leveraging on RBI’s payment and settlement system, which make them affordable and help us take interoperable services to the last mile. For the launch, more than 800,000 man hours have gone into training 15,000 people out of which 11,000 will be providing banking services at the doorstep. By the end of the year, all the 300,000 people will be up and running.

RBI has been very stringent with other payment banks on the failure to meet the compliance criteria. How prepared are you on this front?

There is a lot of focus in making sure that all RBI guidelines in terms of establishing the bank are met, including creation of the right customer facing processes and compliance with end-of-day balances.

We have taken due diligence and made sure that everything is first time right. We have got requisite RBI approvals and things have been reviewed by RBI on how it is being implemented. (Source: Livemint)