Indian Post Payments Bank (IPPB)

About Indian Post Payments Bank (IPPB):

• IPPB has been established under the Department of Posts, Ministry of Communication, with 100% equity owned by the Government of India.
• IPPB was launched on September 1, 2018.
• Vision: To build the most accessible, affordable, and trusted bank for the common man in India. 
• Mandate: To remove barriers for the unbanked and under-banked and reach the last mile leveraging a network comprising 160,000 post offices (145,000 in rural areas) and 400,000 postal employees.
• Headquarters: New Delhi
• Functions:
  • It will accept deposits upto Rs 2 lakh, beyond which the account will be automatically converted into a post office savings account.
  • The products and services of the bank will be made available through various mediums such as counter services, micro ATMs, mobile banking apps, messages, and interactive voice response.
  • The IPPB will use Aadhaar to open accounts, and a QR card and biometrics will be used for authentication, transactions, and payments.

What are“Payments Banks’?

• A payments bank is like any other bank but operates on a smaller scale without involving any credit risk. 
• It was set up on the recommendations of the Nachiket Mor Committee.
• Objective: Widen the spread of payment and financial services to small businesses, low-income households, and migrant labor workforce in a secured technology-driven environment.
• They are registered under the Companies Act 2013 but are governed by a host of legislations such as the Banking Regulation Act, 1949; RBI Act, 1934; Foreign Exchange Management Act, 1999, etc.
• It needs to have a minimum paid-up capital of Rs. 100,00,00,000.
• Activities that can be performed:
  • It can take deposits up to Rs. 2,00,000. It can accept demand deposits in the form of savings and current accounts.
  • The money received as deposits can be invested in secure government securities only in the form of Statutory Liquidity Ratio (SLR). This must amount to 75% of the demand deposit balance.
  • The remaining 25% is to be placed as time deposits with other scheduled commercial banks.
  • It can offer remittance services, mobile payments/transfers/purchases, and other banking services like ATM/debit cards, net banking, and third party fund transfers.
• Activities that can be performed:
  • It cannot issue loans and credit cards.
  • It cannot accept time deposits or NRI deposits.
  • It cannot set up subsidiaries to undertake non-banking financial activities.

Q1) What is a Universal Bank?

A universal bank is a bank that combines the three main services of banking under one roof. The three services are wholesale banking, retail banking, and investment banking. In other words, it is a retail bank, a wholesale bank, and also an investment bank. As well as being able to offer an all-encompassing service, universal banks can reap the synergies that exist when they operate in the three services simultaneously.

Source: India Post Payment Bank wants to convert itself to universal bank: CEO