Jaitley launches India Post Payments Bank, terms it as taking banking to every doorstep

Union Finance Minister Arun Jaitley, along with Minister of State for Communications Manoj Sinha, on Monday launched the India Post Payments Bank (IPPB) at two pilot branches at Raipur and Ranchi through video conferencing from Delhi.

While addressing the media at the event, Jaitley said the banks will pose a serious competition to traditional banks due to lower costs involved.

"In comparison with the regular banks, the overhead costs levied associated with these banks are very less. These banks will pose a serious competitions to the traditional banks as far as small depositors are concerned," he said.

The pilot launch is expected to prove to be a great step for financial inclusion in the country .

Jaitley said the network of post offices can take banking operations to every doorstep.

"The far-off villages always had the issue that they didn't have banks close to their residence. But with this initiative the post office network has been converted into a network of banks," he said.

"The postman connects every household. They can reach every house for banking activity. Hence, banking will reach your doorstep," he added.

As mandated by the Reserve Bank of India (RBI), IPPB would focus on providing basic financial services including social security payments, utility bill payments, person to person remittances, current and saving accounts upto a balance of Rs 1 lakh, distribution of insurance, mutual funds, pension products and acting as business correspondents to other banks for credit products especially in rural areas and among the underserved segments of the society.

The payments bank will offer rate of interest of up to 5.5 percent on the deposits in the savings accounts and it varies depending on the amount deposited.

Earlier, Bharti Airtel and Paytem also launched their Payments Bank at different locations of the country.