On the 1st of September 2018, the Honorable Prime Minister of India, Mr. Narendra Modi, launched the India Post Payments Bank (IPPB), which will operate under the Indian postal department. This 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).
Some say that this is a game changer for financial inclusion in India, while at the same time, supporting the ‘Jan Dhan Yojana’ launched by the GOI in 2014. IPPB is already fully operational with its 650 branches and 3500+ touchpoints and is all set to be functional in 155000 service points by the end of 2018.
Government of India now aims to achieve financial inclusion by providing banking services at the doorstep of crores of Indians. The primary objective of this public payments bank is to help in achieving financial inclusion – by providing savings, remittance, and payment services to the unorganized sectors of the economy. Access to formal banking is expected to give the economy a boost by reducing the unregulated entities. What is also expected of this idea is that it will help rejuvenate the Indian postal system – which is the biggest postal system in the entire world and has a vast network of branches across India. Around 300,000 postal staff is expected to be trained to function as IPPB’s service provider.
This ambitious initiative by the Government of India presents a lot of opportunities such as-
While there are a lot of opportunities, over the next few months, there would be some challenges which will need to be overcome –
While most of the features of the IPPB make it look like an extremely promising initiative towards financial inclusion, what now remains to be seen is how the government addresses these issues and whether the current revenue model is adequate for IPPB’s sustenance.