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The Department of Posts (DoP) wants to ensure that a customer’s cash balance that exceeds ₹1 lakh in its payments bank remains within the postal system through a sweep-out mechanism, whereby the excess balance will be channelised to their Post Office Savings Bank (POSB) account at the end of the day.
As per guidelines of the RBI, payments banks can accept demand deposits – savings and current – up to a maximum of ₹1 lakh per customer.
To overcome this restriction of holding a maximum balance of ₹1 lakh per customer, payments banks have entered into tie-ups with mainline banks so that balances over ₹1 lakh can be converted into fixed deposits with the latter.
The payments banks that have commenced their operations so far include Aditya Birla Idea Payments Bank, Airtel Payments Bank, Fino Payments Bank, India Post Payments Bank (IPPB), Jio Payments Bank and Paytm Payments Bank.
Payment mode
With the launch of IPPB, POSB accounts will be linked to the bank, enabling them for real-time gross settlement (RTGS) and national electronic funds transfer (NEFT) and other online modes of payment, according to the DoP’s latest annual report. “Similarly, POSB will complement IPPB accounts by becoming a sweep-out destination for accounts that have balances above ₹1 lakh at the end of the day. IPPB will also complement e-commerce payments,” the report said.
POSB operates savings accounts, recurring deposit, time deposit, monthly income scheme, Public Provident Fund, National Savings Certificate, Kisan Vikas Patra, Senior Citizens Savings Scheme and Sukanya Samriddhi accounts. It had a customer base of more than 35.67 crore account-holders with outstanding balance of ₹6,80,079 crore as on March-end 2017, served through a network of 1,54,965 post office across the country.
IPPB was incorporated as a public limited company with 100 per cent government equity under the DoP on August 17, 2016. The bank commenced operations in January 2017.
Emphasising that the products offered by IPPB are different from POSB products, the DoP said POSB savings accounts do not have any ceiling unlike payments banks’ savings accounts. IPPB can offer current accounts for use by businesses and institutions, whereas POSB does not offer these accounts.
“Simply put, while POSB is more focussed on returns from small savings, IPPB will be focussed on transactions. Thus, there will be an inherent synergy between the two and each will complement the other,” the department said.
Customers
While its services will be available to all citizens, the report said IPPB will primarily focus on serving social-sector beneficiaries, migrant labourers, unorganised sector employees, Micro Small and Medium Enterprises (MSMEs), panchayats and low-income households in rural areas and the unbanked and under-banked segments.
The scope of activities of payments banks include acceptance of demand deposits with a maximum balance of ₹1 lakh per customer, issuance of ATM/debit cards (they cannot issue credit cards), payments and remittance services through various channels, become Business Correspondent of another bank, and distribute (on non-risk sharing basis) simple financial products such as mutual fund units and insurance products.
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