In its recent announcement, India Post Payments Bank has changed its future course by converting to a small finance bank. Through this, the postal department wishes to reach out to the remotest section of the society, by offering small loans and open around one crore bank accounts in about 100 days’ time frame.
The announcement was made at the conference held at Srinagar, Jammu and Kashmir, from 29th- 31st July 2019. The motto of this conference is aligned with the Prime Minister’s New India initiative.
This decision of converting to the small finance bank by the Government-owned India Post Payments Bank is designed to offer micro credit at the doorsteps. To achieve this target, they have decided to partner with common service centers under Digital India initiative, to provide citizen friendly options such as banking, DBT, bill and tax payments, insurance, etc. at post offices.
A payment bank can offer a variety of services such as accept deposits of up to Rs 1 lakh, mobile payments or issue banking services such as ATM/ debit cards, net banking but can’t offer any loans or issue credit cards. RBI till date has approved about 10 small finance banks which incorporates Ujjivan Small Finance Bank, Equitas Small Finance Bank, among others.
At the time of its Launch in 2018, the government expected India Post Payments Bank to turn profitable in about two years. As per the recent data from the Ministry of Electronics and Information Technology, the IPPB has only been able to achieve 0.14% of the target given for digital transactions.
With advent of advanced technologies such as artificial intelligence, Internet of things and cloud computing, the government has been urging the head of the circles to adopt to them to strengthen the Digital India campaign.