The Indian banking sector, during its long history of over a century, has grown in size and variety.
We have commercial banks, regional rural banks, local area banks, small finance banks and now payment banks. Also, let’s not forget the other classification, sector banks and private sector banks. Differing in sizes, areas of operations and clientele to be served, some of them have served generations of customers, while a few of them have bowed out, under different situations.
India Post Payment Bank is the new entrant, promoted by the Postal Department of Government of India, which is planning to initiate the process of morphing the post offices as access points for banking.
Six Payment Banks are now operational. Four of them, Airtel Ltd, India Post, Fino and PayTM came up in 2017. A year later, Aditya Birla and Jio joined them. India Post Payment made a beginning in 2017 through two branches only. It went full blast in September 2018. While in all eleven licences have been given by the Reserve Bank of India, for the payment banks, only six have come up so far.
India Post Payment Bank
Unlike others, India Post has a different pedigree. Its promoter, Indian Postal Department, has a century-long record of serving the nation’s population throughout the country. It handled the distribution of letters, issuing postal orders, delivery of small parcels under value payable post, besides the remittance of money to every corner of the country. Its 1.55-lakh offices spread out even in remote villages, will be linked to this Bank by the end of December 2018. Besides, it has 3 lakh employees working in addition to their daak seva; they would be rendering bank seva.
This new Bank has 650 branches and 3250 access points. Its objective is to link the unbanked villages into the banking system. These branches would be offering a wide range of products such as savings and current accounts, money transfer, direct benefit transfer, bill and utility payments and enterprise and merchant payments. Mandated by the Reserve Bank of India, it can accept deposits up to Rs.1 lakh only and cannot perform ending business. As a result, it cannot become a burden to the banking sector with NPAs!
India Post Payments Bank can provide access to third-party financial services like mutual funds, insurance and pension funds. It also offers the facility of zero balance deposit accounts, unlike some big banks, which charge heavily for not maintaining the minimum balance. Incidentally, the SBI has earned a significant amount by milking the defaulters under this process. To enable its customers to have easy access to insurance and other insurance products, the Bank has already signed a Corporate Agency Agreement with Bajaj Allianz Life Insurance Company.
Digital Banking
Instead of the credit and debit cards, India Post Bank would be introducing QR cards. These cards would be able to replace money orders. All retail payments of utility bills and even the purchases from small shops could be made through the QR cards. Even doorstep banking is possible, by asking the post office to come down to give the cash on payment of Rs.25. The process is simple, as the postman would scan only the fingerprint before making the payment.
Aadhar was once considered a prerequisite for opening an account with this Bank. However, with the recent judgment of the Supreme Court of India, this stipulation may not be applicable. This has deprived the banking sector deprived of the only means for assessing the exact number of bank customers, instead of the number of bank accounts. By linking Aadhar with PAN card, it is possible to count the exact size of the customer base, even where the customers have multiple accounts in different banks.
