Finance minister Arun Jaitley has said that payments banks will have a multiplier impact on the banking system as they will take banking operations to every doorstep in remote areas at lower cost. Jaitley said that the pattern in which the payments bank is being formed, the overhead cost is very less because the existing structure is being used and added that payment banks will not have any geographical limitations. The telecom company stores will run as payments banks, the post office in the country will turn into bank branches.
Jaitley launched the pilot services of India Post Payments Bank (IPPB) at Raipur and Ranchi and said that IPPB will expand operations to 650 districts by September. Jaitley said that IPPB and India Post will work in tandem to deliver benefits of government schemes. Further he said that the demand for a brick and mortar bank branches in far flung villages will get reduced as the services of lakhs of postmen gets converted into banking operations with the launch of IPPB.
To meet government’s financial inclusion target, the Reserve Bank of India (RBI) has come with a new concept of payments bank which will accept deposits of up to Rs 1lakh per account from individuals and small businesses. This new model of banking allows mobile firms, supermarket chains and others to cater to banking requirements of individuals and small businesses and will confine its activities to acceptance of deposits, remittance services, internet banking and other specified services.