Indian Post Payment bank

1. India Post Payment Bank
Group 3:
Mandeep Singh (211)
Gagan Vij (223)
Ishan Kalra (225)
Ruchika Singhal (230)
Anchal Aggarwal (201)

2. RBI Governor Raghuram
Rajan has said that PBs will
“revolutionize banking” in
India, without posing a
competitive threat to
existing banks.

5. Application Process
• Procedure for application:
– In terms of Rule 11 of the Banking Regulation (Companies) Rules, 1949, applications shall be
submitted in the prescribed form (Form III) to the RBI
– In addition, the applicants should furnish the business plan and other requisite information as
indicated. Applications will be accepted till the close of business as on January 16, 2015.
• Procedure for the RBI decisions:
– The applications will be initially screened by the RBI to ensure prima facie eligibility of the
applicants. The RBI may apply additional criteria to determine the suitability of applications, in
addition to the prescribed ‘fit and proper’ criteria
– Thereafter, an External Advisory Committee (EAC) comprising eminent professionals like
bankers, chartered accountants, finance professionals, etc., will evaluate the applications.
– The EAC will reserve the right to call for more information as well as have discussions with any
applicant/s and seek clarification on any issue as may be required by it. EAC may seek more
information and call for discussions with the applicant.
– EAC will submit its recommendations to the RBI for consideration. The decision to issue an in-
principle approval for setting up of a bank will be taken by the RBI. The RBI’s decision in this
regard will be final
– The validity of the in-principle approval issued by the RBI will be 18 months, within which
bank will have to be set up

7. Two India

10. How will they work
Account will be opened on the
basis of unique mobile no.
Customer can make a transaction or remittance through web based
mobile application or through IVR/USSD gateway to registered merchant
or user.
PB user can withdraw cash or top-up their accounts from points (Vendor,
ATM, Agent) recognized by their payment bank service provider.

11. Current Challenges
• India’s cash addiction - Amazon, offers cash-on-
delivery
• Issue ATM/debit cards – but not credit cards.
• Low-cost domestic remittance alternatives.
• Large upfront investment and long road to
profitability
• Figuring out partnerships with banks on credit-
issuance
• Payments Banks present an exciting opportunity
for digital financial inclusion in India

12. Future Down the line

15. Reasons for withdrawal from
payment banks
• Payments banks may find it tough to become profitable in
the initial stages
• Entities do not have the liberty to lend.
• Payments services to low-margin entities.
• Payments bank have to primarily survive on fee-income
since 75 percent of their deposits have to be mandatorily
invested in government bonds with maturity up to a year.
• Payments banks can only accept deposits up to Rs 1 lakh.
Tech Mahindra
Dilip Shanghvi-IDFC
Bank-Telenor JV
Cholamandalam Investment
and Finance Co.

16. Should IPPB withdraw from
payment banks or stick around ?
• The plan is for IPPB to start operations by March 2017
• IPPB probably has the best shot at success in the payments
banking space
• Plans to open 650 IPPB branches by September 2017
• The payment bank branches will be separate from India
Post and will be staffed by a separate set of employees
• Expects support of more than 250,000 Grameen Dak
Sewaks
• India Post looks to appoint board for payments bank in 1-2
months as on Jun 30
• IPPB expects to break even by year seven of its operations.

17. Why everyone wants a piece of
India Post’s payments bank
• 50 companies including Barclays Bank, Citibank and many
state-owned banks have sent proposals for a partnership with
India Post’s payments bank
• IPPB has network of more than 150,000 branches, of which
almost 140,000 are in India’s rural hinterland.
• IPPB will be a game changer for rural and suburban India.
• The payments bank will begin with Rs.400 crore equity capital
and Rs.400 crore as grant from the government. IPPB plans to
set up 5,000 automated teller machines.
Source : Livemint on Sun: Jun 12 2016
N.C. Saxena, former secretary of the erstwhile Planning Commission, said “financial
institutions are sensing the potential that IPPB has in terms of its connectivity and reach.”