Q. 139. Write a short note on India Post Payments Bank.
Ans. India Post Payments Bank (IPPB) will be set up as a public limited company under the Department of Posts with 100 per cent government equity.
A. The total corpus of the payments bank is of Rs 800 crore, which will have Rs 400-crore equity and Rs 400-crore grant.
B. A total of 650 branches of the postal payments bank would be established in India, which will be linked to rural post offices.
C. India has 154,000 post offices, of which 139,000 are rural post offices. IPPB will obtain banking licence from the Reserve Bank of India (RBI) by March 2017 and by September 2017, all 650 branches of the postal payments bank would become operational.
D. IPPB will offer demand deposits such as savings and current accounts upto a balance of Rs 1 Lac, digitally enabled payments and remittance services of all kinds between entities and individuals and also provide access to third party financial services such as insurance, mutual funds, pension, credit products, forex, and more, in partnership with insurance companies, mutual fund houses, pension providers, banks, international money transfer organisations, etc.
The four key features of IPPB are:
FINANCIAL LITERACY: Even a little saving can go a long way if channelized correctly. With trustworthy advice and services designed to include everybody, income can be invested correctly, more can be saved, and people can start moving forward, faster. IPPB aims to make India prosperous by ensuring that everyone has equal access to financial information and services, no matter who they are, what they earn and where they live.
STREAMLINING PAYMENTS: Beneficiaries can access income from government’s DBT programs like MNREGA wages, Social Security Pensions and scholarships, directly from their IPPB bank account with near zero friction. They can also pay their utility bills, fees for educational institutions and many more from the same IPPB account. It ensures that wherever they are, they can make the most of financial opportunities available to them.
FINANCIAL INCLUSION: Millions of Indians don’t have access to banking facilities. They cannot avail of government benefits, loans and insurance, and even interest on savings. IPPB will reach the un-banked and the under-banked across all cross sections of society and geographies. Services offered by IPPB will help them take the first step towards prosperity.
EASE OF ACCESSIBILITY: IPPB is powered by the very postmen who deliver our letters. With over 1.54 lac post offices across the country, India Post enjoys the trust of Indians everywhere. The postal delivery system will make IPPB, India’s most accessible banking network. IPPB will also offer services through internet and mobile banking, and prepaid instruments like mobile wallets, debit cards, ATMs, PoS and MPoS terminals etc.
What is Small Finance Bank (SFB)? Who can get the license? What are its salioent features?
The Small Finance Bank (SFB) is a private financial institution intended to further the objective of financial inclusion by primarily undertaking basic banking activities of acceptance of deposits and lending to un-served and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities, but without any restriction in the area of operations, unlike Regional Rural Banks or Local Area Banks.
Following are ligible to apply
a) Resident individuals/professionals with 10 years of experience in banking and finance and companies and societies owned and controlled by residents,
b) Existing Non-Banking Finance Companies (NBFCs),
c) Micro Finance Institutions (MFIs), and
d) Local Area Banks (LABs) that are owned and controlled by residents can also opt for conversion into small finance banks.
The minimum capital for SFBs is prescribed at Rs. 100 crores. Foreign Investment is permitted as in the case of other private sector commercial banks.
They are subject to all prudential norms and regulations of RBI as applicable to existing commercial banks like maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
SFBs can undertake other non-risk sharing simple financial services activities, not requiring any commitment of own fund, such as distribution of mutual fund units, insurance products, pension products, etc. with the prior approval of the RBI.
The concept of small finance banks was also one of the recommendations in the 2009 Report - A Hundred Small Steps - of the Committee on Financial Sector Reforms headed by Dr. Raghu Ram Rajan.