INDIAN
POST PAYMENTS BANK (IPPB) - ECONOMY
News: SIDBI To Use Indian Post Payment
Bank For Credit Delivery To Small Biz In Remote Areas
What's
in the news?
●
India Post Payments Bank (IPPB) has partnered with the Small
Industries Development Bank of India (SIDBI)
to extend financial and other support services to MSMEs in rural and remote
areas.
Key
takeaways:
●
SIDBI
provides credit to small businesses, while IPPB provides
banking transaction services, including onboarding merchants for digital
transactions. Payments banks are not allowed to provide credit but can partner
with other institutions for distribution.
●
The partnership aims to utilize IPPB’s rural reach and deep connect
with village-level communities through postal department employees and
SIDBI’s lending and credit risk assessment models to reach informal and micro
enterprises.
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.
Functions:
●
It will accept deposits up to 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.
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 labour
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.
Features:
●
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
not allowed:
●
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.