Finance Minister Arun Jaitley today said payments bank will have a “multiplier impact” by providing doorstep banking to people in remote areas at lower cost and compete with traditional banks in future.
Launching the pilot services of India Post Payments Bank (IPPB) at Raipur and Ranchi, Jaitley said IPPB will expand operations to 650 districts by September and have a “multiplier impact” on the country’s banking system and financial inclusion.
India Post, which got RBI nod to launch banking operations on January 20, is only the third entity to have got permit to start operations after Airtel Payments Bank and PayTm.
“The pattern in which the payments bank is being formed, the overhead cost is very less because the existing structure is being used. Going forward, a time will come when for small depositors this payments bank will give competition to normal banking,” Jaitley said.
He said telecom companies have lakhs of stores which will start working as payments banks. Also with 1.55 lakh post office branches and the services of lakhs of postmen being converted into banking operation with the launch of India Post Payments Bank, the demand for a brick and mortar bank branches in far flung villages will get reduced.
Payments banks can accept deposits of up to Rs 1 lakh per account from individuals and small businesses.
The new model of banking allows mobile firms, supermarket chains and others to cater to banking requirements of individuals and small businesses. It will be set up as a differentiated bank and will confine its activities to acceptance of demand deposits, remittance services, Internet banking and other specified services.
India Post Payments Bank will ensure doorstep banking and by September as all post office branches get converted into banks, the banking system of the country will gain a lot of strength, Jaitley said.
(This article has not been edited by DNA’s editorial team and is auto-generated from an agency feed.)