India Post Payments Bank needs Rs 1,435 cr from govt

The Cabinet on Wednesday approved an increase in outlay for India Post Payments Bank (IPPB) to Rs 1,435 crore from Rs 800 crore earlier.

Initially, the bank will start operations with 650 branches and 3,250 access points across the country on September 1 by offering financial services in rural areas, including savings and current accounts, money transfer, direct benefit transfer, bill and utility payments and enterprise and merchant payments.

Currently, the payments service is offered by Airtel Payments Bank and Paytm Payments Bank.

The revised cost estimate of Rs 635 crore is on account of technology costs (Rs 400 crore) and human resource expenses (Rs 235 crore), according to an official statement.

“This will be the most accessible, affordable and trusted bank for the common man. It will aim at financial inclusion for unbanked and under-banked population,” Communications minister Manoj Sinha said.]

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The minister said all 1.55 lakh post offices in the country will be linked to its system by December 31. Of these, 1.30 lakh access points will be located in rural areas.

The payments bank expects to be profitable in three years.

IPPB will offer 4% interest rate on savings accounts. 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 offer insurance and loans.

“However, we have made provision for this through third-party products. We have entered into an alliance with PNB for Pradhan Mantri Jeevan Jyoti Bima Yojana,” Sinha said.