NEW DELHI: It is back to basics for India Post Payments Bank (IPPB). It is tapping into World War-era phone-based technology and its vast network of postman to target a customer base of around 850 million, which either have no access to telephony or still depend on feature phones.
"Banks and payments banks are two different things. Over 90% households have access to bank accounts. So, we are targeting remittances and bill payments," said an officer at the bank, which launched operations a month ago, offering 5.5% interest on deposits.
Unlike full-fledged banks, payments banks can accept deposits up to Rs 1 lakh and have to mandatorily park 75% of funds in government bonds. They are not allowed to offer loans either.
With its network of over 1.5 post offices, IPPB is seen to be a major competitor for banks, especially in rural areas and small towns. The bank, floated by India Post, is running behind schedule as it is yet to tie up with a technology vendor for its banking services. But it is still targeting 2 crore customers in the first year with business of around Rs 450 crore. By the fifth year, the bank hopes to have eight crore customers with a business of Rs 2,500 crore.
A key focus area for IPPB is one billion bills that are paid every month, with the average ticket size being Rs 300. This is where Giro — an electronic fund transfer tool used in Europe and Japan — will come in handy. Apart from helping customers settle bills, a worker in a city can add his wife or mother as a beneficiary and transfer funds into their accounts by issuing instructions to a call centre. The wife or the mother will then use Aadhaar based authentication to withdraw funds either at a post office or ask a postman to deliver cash at home, for which a small fee may be levied.