RBI has given license to post offices for the payments bank.
India post is the 3rd entity to get the license of payments bank after Paytm and Bharti Airtel.
The main objective behind payments banks is to achieve financial inclusion.
As per the initial road map, each post office in the country will offer the post bank services.
The department of post has an existing network of around 1,55,000 post offices currently of which 1,39,222 post offices are located in rural areas.
IndiaPost plans to open 650 new branches for the payment bank.
Payments banks can accept deposits from individuals and small businesses of up to Rs 1 lakh per account.
However, Payments Banks are not allowed to lend money.
In 2015, RBI had granted ‘in-principle’ approval to 11 entities, including Department of Posts, to set up payments banks and proposed to give such licences.
The main objective behind payments banks is to achieve financial inclusion of millions of people, particularly in the remote areas of the country.
Finance Minister Arun Jaitley launched the operations of the India Post Payments Bank (IPPB) as two pilot branches at Raipur and Ranchi.
IPPB will effectively leverage the ubiquitous post office network with its pan-India physical presence, long experience in cash handling and savings mobilization, backed by the ongoing project of IT-enablement, to bridge this gap in Financial Inclusion.
IPPB received the cabinet’s approval on 1st June, 2016 and was incorporated as on 17th Sept, 2106. Today it became the second payments bank to launch its operations.