IPPB, India’s Largest Payments Bank Launched: All You Need To Know

Prime Minister Narendra Modi launched the India Post Payments Bank (IPPB) at Talkatora Stadium in New Delhi. IPPB is the largest payments bank in the country by network size. The launch of India Post Payments Bank marks another significant milestone in the government’s endeavour to take the benefits of a rapidly developing India to the remotest corners of the country. Now, IPPB has 650 Branches and 3250 Access Points spread across the country. All the 1.55 lakh post offices in the country have been linked to the IPPB system by December 31, 2018. Now you all must be pondering that ‘what will be the impact after the launch of IPPB in Indian Banking System’? Well, in order to understand it, first of all, we need to know about what is a Payments Bank? 

What is a Payments Bank? 
A payments bank is a new category of banks conceptualized by the Reserve Bank of India, which operates at a smaller scale than an actual bank and doesn’t involve any credit risk. It can carry out most banking operations but can’t advance loans or issue credit cards. These banks operate digitally (on mobile phones and other devices using internet) rather than through physical branches.
How do payments banks operate?
A payment bank is not a commercial bank but a registered public limited company under the Companies Act, 2013 which has also obtained a license under Section 22 of the Banking Regulation Act, 1949 and a special permit by RBI to operate as a payments bank.
Payments Banks cannot carry out lending activities like: 
1. Advancing loans
2. Issuance of credit cards, etc.
A payment bank should fulfil the following conditions set by RBI: 
1. The minimum capital investment to be Rs100 crore.
2. For the first five years, the stake of the promoter to be 40% minimum.
3. 25% of its branches must be in the unbanked rural area. 
Ten Things You Must Know About India Post Payments Bank: 
1. IPPB 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. IPPB will offer 4% 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 IPPB will, in alliance with other financial service providers, offer third-party products. For example, in case of loans, IPPB will work as an agent of PNB.
6. IPPB 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 IPPB’s technology platform.
8. IPPB has been allowed to link around 17 crore postal savings bank (PSB) accounts with its accounts.
9. IPPB 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 has approved an 80% increase in spending for IPPB to Rs 1,435 crore. 
List of Payments Banks Operating in India: 
1. Airtel Payments Bank (1st company to start this service) 
2. India Post Payments Bank 
3. Paytm Payments Bank
4. Fino Pay Tech Ltd
5. National Securities Depository Ltd
6. Aditya Birla Nuvo Ltd
7. Vodafone m-Pesa Ltd
8. Reliance Industries Ltd


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