{"id":1596,"date":"2020-08-04T18:07:01","date_gmt":"2020-08-04T12:37:01","guid":{"rendered":"https:\/\/blog.tickertape.in\/?p=1596"},"modified":"2022-09-14T10:28:43","modified_gmt":"2022-09-14T04:58:43","slug":"will-india-post-revive-to-deliver-more-than-just-letters","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/will-india-post-revive-to-deliver-more-than-just-letters\/","title":{"rendered":"India Post Payments Bank: All You Need To Know About IPPB Revival In 2022"},"content":{"rendered":"\n<p>Among other things, relevance is key to the longevity of a service provider. If the service is irrelevant, it\u2019s time to pack bags and leave. Ergo, it is natural to wonder why India Post remains relevant even today, when modern forms of communication have substituted hand-written letters. Well, it\u2019s because the transformation wasn\u2019t all that damaging for India Post. The ubiquitous post department is still relevant in offering high-return savings schemes. These can never get outdated, can they?<\/p>\n\n\n\n<p>Also, India Post\u2019s accessibility plays a pivotal role in enhancing financial inclusion in rural India. Nevertheless, times are gloomy for India Post, which has been incurring huge losses for a while now. Fortunately for India Post, the government has a revival plan in mind. And that is to make it a full-fledged bank! Ssssshh, the plan is not yet finalised. But hey, the initial plan was to reduce the number of public sector banks in the country. That is why, just some months ago, a handful of PSBs were merged to dilute the number to just 4. Then why the contradiction? Let\u2019s read on to find out.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/will-india-post-revive-to-deliver-more-than-just-letters\/#IPPB-the-by-product-of-India-Post-and-modernity\" title=\"IPPB: the by-product of India Post and modernity\">IPPB: the by-product of India Post and modernity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/will-india-post-revive-to-deliver-more-than-just-letters\/#The-trigger-to-convert-India-Post-into-a-full-fledged-bank\" title=\"The trigger to convert India Post into a full-fledged bank\">The trigger to convert India Post into a full-fledged bank<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/will-india-post-revive-to-deliver-more-than-just-letters\/#Is-the-probable-plan-to-make-India-Post-a-bank-even-logical\" title=\"Is the probable plan to make India Post a bank even logical?\">Is the probable plan to make India Post a bank even logical?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/will-india-post-revive-to-deliver-more-than-just-letters\/#Whats-for-Regional-Rural-Banks-in-the-revival-plan\" title=\"What\u2019s for Regional Rural Banks in the revival plan?\">What\u2019s for Regional Rural Banks in the revival plan?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/will-india-post-revive-to-deliver-more-than-just-letters\/#Whats-for-India-Post-in-the-revival-plan\" title=\"What\u2019s for India Post in the revival plan?\">What\u2019s for India Post in the revival plan?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/will-india-post-revive-to-deliver-more-than-just-letters\/#Final-thoughts-on-the-revival-plan\" title=\"Final thoughts on the revival plan\">Final thoughts on the revival plan<\/a><\/li><\/ul><\/nav><\/div>\n<h3 class=\"wp-block-heading\" id=\"IPPB\"><span class=\"ez-toc-section\" id=\"IPPB-the-by-product-of-India-Post-and-modernity\"><\/span>IPPB: the by-product of India Post and modernity<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Despite offering a relevant high-interest saving scheme and having a wide reach, the need for India Post to keep up with modernity was still felt. That is why PM Modi launched the India Post Payments Bank (IPPB) in 2018. This RBI-owned public sector company mainly focused on offering doorstep banking to customers in rural areas. The transaction limit was Rs Rs 10,000 and the cost per instance was 15-35 per transaction.<\/p>\n\n\n\n<p>Customers could open current accounts, transfer funds, pay utility and merchant bills via the traditional method of over-the-counter service, mobile banking app, micro ATM, and phone calls. Moreover, IPPB also provided access to third-party financial services including <a href=\"https:\/\/www.tickertape.in\/blog\/mutual-funds\/\">mutual funds<\/a>, insurance, pension, and forex. However, unlike a traditional bank, India Post Payments Bank could only accept a deposit of up to Rs 1 lakh per customer. Further, it couldn\u2019t offer loans and credit cards.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Trigger\"><span class=\"ez-toc-section\" id=\"The-trigger-to-convert-India-Post-into-a-full-fledged-bank\"><\/span>The trigger to convert India Post into a full-fledged bank<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>India Post Payments Bank failed. And one of the reasons was that its pay and allowances exceeded its revenue. To be precise, India Post\u2019s employee costs excluding pension in FY 2020 were 142% more than its revenue. And in the previous year, the total employee cost was for Rs 27,722 cr including pension costs of Rs 10,271 cr. This is certainly not a pleasant sight. No wonder why the government wants to run to India Post\u2019s rescue.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Logical\"><span class=\"ez-toc-section\" id=\"Is-the-probable-plan-to-make-India-Post-a-bank-even-logical\"><\/span>Is the probable plan to make India Post a bank even logical?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The plan, which is not yet finalised, may seem to be absurd\u2014especially because India Post was denied a universal banking license in 2013 (citing RBI didn\u2019t want to create a new PSU). But 5 years later, India Post got the payments bank licence, and now the chances are that it could become a full-fledged bank).<\/p>\n\n\n\n<p>What\u2019s with all the foot-dragging? In RBI\u2019s defence, the latest plan is more encompassing and would make India Post, IPBP, and 45 Regional Rural Banks (having a strong network of 14,000 branches) subsidiaries of an RBI-owned, public-sector holding company. This also includes RRBs that have a 50% government stake as well.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"RRB\"><span class=\"ez-toc-section\" id=\"Whats-for-Regional-Rural-Banks-in-the-revival-plan\"><\/span>What\u2019s for Regional Rural Banks in the revival plan?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Firstly, the probable revival plan would save India Post from tumbling further. Second, it would enhance RRBs\u2019 efficiency, minimise their overheads, and optimise their use of technology. Today, Regional Rural Banks are divided into two sets. The first one is over-capitalised but doesn\u2019t extend enough credit. The second one has limited capital but extends too much credit. Ergo, falling under the fold of a strong holding company as per the plan would help RRBs to use their capital efficiently. On the brighter side, the plan would bring forth RRBs\u2019 ready-to-exploit deposit and lending portfolio, on which India Post Bank can build.<\/p>\n\n\n\n<p>Moreover, Regional Rural Banks are financially well-placed compared to India Post. After all, the government has taken several initiatives on that front. But RRBs are not the only ones that are adding on to the plan. Let\u2019s not forget the edge that India Post has. The post department runs 1.56 lakh post offices across the country and the plan is to convert them into bank branches. Together with Regional Rural Banks\u2019 branches, that\u2019s a huge chain of bank branches we are looking at. If this plan sees the day of the light, rural India will have a banking experience like never before.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"India-Post\"><span class=\"ez-toc-section\" id=\"Whats-for-India-Post-in-the-revival-plan\"><\/span><strong>What\u2019s for India Post in the revival plan?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Speaking of what\u2019s in store for India Post in its revival plan, the post department runs 1.56 lakh post offices across the country and the plan is to convert them into bank branches. Together with RRBs\u2019 branches, that\u2019s a huge chain of branches we are looking at. Further, the plan looks to convert India Post\u2019s 4.2 lakh postmen into banking correspondents. Yes, that\u2019s the kind of upgrade we might be looking at in the coming time.<\/p>\n\n\n\n<p>Once the proposed bank takes the form (err.. let\u2019s call it the India Post Bank hypothetically), it would be mandated to lend to priority sectors including agriculture and MSMEs. India Post is anyway doing that even now. So, there\u2019s no major change here. Only, the lending limits would increase and the priority sector may benefit from the development. That\u2019s a fair deal for all the beneficiaries of this unprecedented, yet-to-be finalised revival plan.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"Conclusion\"><span class=\"ez-toc-section\" id=\"Final-thoughts-on-the-revival-plan\"><\/span><strong>Final thoughts on the revival plan<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If this plan sees the day of the light, rural India will have a banking experience like never before. However, that may just be in theory. Practically, punctuality, efficiency, and the will to serve the consumers right are what matters the most. So, will this plan rescue India Post? Will our high-coo pigeon deliver more than just letters? Or would the plan washout amid scarce revenue, swelling employee costs, and bureaucracy?<br><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The loss-making India Post has a new ray of hope with the government planning to make it a full-fledged bank. Ssssshh, the plan is not yet finalised! Read the deets here<\/p>\n","protected":false},"author":27,"featured_media":1600,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[10,1744],"tags":[50,47,48,49,51,53,54,52],"acf":[],"modified_by":null,"jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2020\/08\/India-Post-1.jpg?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/1596"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=1596"}],"version-history":[{"count":8,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/1596\/revisions"}],"predecessor-version":[{"id":10176,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/1596\/revisions\/10176"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/1600"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=1596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=1596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=1596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}