Full-scale launch of DakPay by mid-FY26: India Post Payments Bank MD & CEO

R Viswesvaran, managing director and chief executive officer (MD & CEO) of India Post Payments Bank says transition to small finance bank will help margins but operational cost for small ticket loans are very high. He spoke to Manojit Saha in an exclusive interview. Edited excerpts:

 

India Post Payments Bank has completed operations of more than six years. What are the key milestones achieved?

 

The bank started operations in 2018, but before that, in 2016, it was envisioned that it would be a bank which takes care of financial inclusion, primarily. Because the Prime Minister then saw that there is a Department of Post (DoP) with a wide network of post offices, more than 165,000 all over India, and having more than 250,000 GDSes, or Gram Dak Sevaks. Can they be able to give doorstep service? Can we provide banking service for the unbanked? That was the vision. So, the vision was to be a digital bank, take care of the digital aspects completely, use the physical network of the DoP, do a complete financial inclusion, making payments available, and give them direct benefit transfer (DBT). Also, the vision was to include the most excluded, the women of rural centres. And be self-sustainable and profitable, and should not be a drain on the government.

 

Originally, it was thought that the bank would be profitable in the seventh year. The bank has been profitable from the fourth year itself.

 

So, this is the third financial year, we have been in profit continuously. And we hope that there will be profit going forward. Today we are actually a completely digital setup, capable of opening an account to a customer within three-to-five minutes. We do more than 2.5 crore transactions a day.

 

How many accounts are opened every day?

 

We open more than 60,000-70,000 accounts every day. As much as 79% of the transactions are happening in rural centres; 44% accounts are held by rural women. DBT is another big success for us. Today we are having an 8% market share in DBT.

 

In schemes like PM-Kisan Samman Nidhi, we have a 12% market share, second only to State Bank of India (SBI). And in PM-Kisan, 59% of the beneficiaries are women, rural women. Today we have 11.2 crore customers.

 

You said you do 2.5 crore transactions every day. What was the figure two years ago?

 

We have almost doubled the transaction volume in one year. The rate of growth is somewhere like 70%-80% year-on-year (Y-o-Y). In terms of customer growth, we had 8.8 crore customers last March, and today we have 11.2 crore. We open about 60,000-70,000, sometimes even 80,000, accounts a day.

 

So, going ahead, say one year down the line, where do you see this 2.5 crore number?

 

According to our projections, this number can go up to six crore in the next two-three years. In the peak time, we are able to do more than 4,500 transactions per second. So, that is the capability of the system, which is also being enhanced for the higher transaction volume envisaged.

 

The Union Budget said that India Post will be transformed into a large public logistic organisation. And India Post Payments Bank, alongside 2.5 lakh Dak Sevaks, will act as a catalyst for the rural economy. So, what will be your role here?

 

See, the logistics part is completely India Post's game. We are going to act as a catalyst for the rural centres. Number one is a combination of cash pickup, EMI pickup, and DBT. Number two is insurance. Number three is credit under assisted digital service. So, by this bouquet of services, we will be playing as a catalyst for the rural economy. This is our domain.

 

Do you see transitioning into a small finance bank? What are the advantages?

 

What we are doing is we are taking deposits — current account and savings account deposits. As much as 75% of the deposits are invested in government securities. And 25% we deposit in other scheduled commercial banks. The deposit base is ₹18,000 crore. There is a feeling that the margin available to operate is thin. And the number of available opportunities for us is very limited.

 

Lending will help margins to expand. However, there is an operating cost there. The cost of lending, especially small ticket, is much higher. The cost of servicing is also very high. Yes, of course, lending will help the margins. But it is not an easy game. This is also subject to regulatory approvals.

 

Third-party payments apps have cornered the majority of digital payment market share. What is your game plan there?

 

Yes, actually we are also having a similar app known as DakPay. It has launched already, but we are in the testing phase. We have made it available only on Android phones. We expect a full-scale launch somewhere in the middle of the next financial year (FY26). Maybe by August.