Dinesh Kamath's Editorial 'Will the IPPB enterprise succeed?' that was published in Newsband

Will the IPPB enterprise succeed?

Prime Minister Narendra Modi launched the India Post Payments Bank (IPPB). The government-owned payments bank will be able to accept deposits of up to ₹1 lakh from customers but without the rights to use these funds to advance risky loans at higher interest rates.

The primary rationale behind the public payments bank idea is to help in the government’s goal of achieving financial inclusion by providing savings, remittance, and payments services to the rural and unorganised sectors of the economy. The postal system has a wide network of branches across India. There are 155,000 post offices in the country.

The IPPB promises to pay an interest rate of 4% to its savings account customers. The IPPB is also likely to face stiff competition from private companies, which are far more customer-friendly compared to the government-owned behemoths.

The core strength of IPPB lies in its humongous reach across the country. It will certainly have an edge over other private players in rural areas, where it has 1.39 lakh post offices. However, the real success will depend on the way the organisation actually delivers the services. Reskilling huge number of postmen to enable them to deliver financial services through smart phones, terminals will be a challenge.

Also, Jan-Dhan Yojana succeeded in creating 30 crore bank accounts, large section of which was from these rural areas; so do we expect these people to open a new account now?

Possibilities are boundless for IPPB. It should enter e-commerce business in future, utilizing its century old experience of delivering posts/articles and emerging technologies.

Private entities look at customer as king and ensure speedy & effective services are rendered to their customers. This is a point to be considered by IPPB along with revenue generation.

One of the advantage of the Postal Dept. managing the services of postal payment bank is that it mostly corruption free. That is a welcome feature.

With the launch of the IPPB, the current central government has really taken a venturesome effort towards the financial inclusion of the rural and unorganised sectors' people. It’s a nice initiative by the government. It will surely help the rural population and increase revenues for the postal department.

we have paytm, airtel, etc payment banks but there is very less participation from rural areas as there is less faith on private entities and lack of awareness about online transactions. India’s post payment bank payment bank is government entity so rural people participation will be more and also it is operates by post office so postmen can help uneducated people in rural areas and also it is offering 4 % interest rate and having the option of online mode; so people from remote places can participate. It is the game changer in financial inclusiveness.