Marketing plan for India post payments bank

Abstract

Financial Inclusion always remains one of the key priorities of the government. In India, access to banking is less compared to the developed countries. The banking mainly involves four components a) Savings Bank Services b) Credit/Loan Services and insurance c) Remittance services d) Payment Services. Dr. Nachiket Mor committee constituted by the Reserve Bank of India to Study the "Comprehensive Financial Services to small businesses and low-income Households" came up with the idea of Payments Bank to widen the spread of payment and financial services to small business, low-income households, migrant labor workforce in a secured technology-driven environment. The payments banks like other banks do banking operations except it can't advance loan/credit and it can accept demand deposit only for a maximum amount of One lakh rupees. It can offer Remittance services, Payment services, and other third-party services to its customers. India Post (Department of posts) operates its Savings Bank as an agent service for the Ministry of Finance to augment the Rural Savings. In the present conditions, the Postal department cannot lend its deposit collected from its customers to the common public and earn revenue from the difference in the interest spread on par with the regular banks. The deposits collected are and on behalf of the Ministry of Finance are credited to the Government of India in the Public Account of India and turn Department of Posts will receive Commission from the Ministry of Finance for the service it is rendering to the public under the savings Banks Category. India Post desires to transform its Savings bank operation completely to full-fledged banking services and approached the RBI for the license, but RBI suggested for Payments bank license instead of a full banking license. Along with India Post, 10 more institutions were given licenses to operate payments banks in the Banking Environment. India Post Payments Bank (IPPB) was floated as a 100% government-owned bank in Sept 2018 with an initial capital of Rs. 1000 crore by the India post. It leverages the network of India post which is having nearly 15500 post offices throughout the country to carry out its operations. As of 2020, India Post Payments Bank (IPPB) has opened 3.5 crore deposit accounts. The main challenge of IPPB is the competition it is facing from other regular banks and payments bank which are offering a similar bouquet of services. As the operating margin of the payments bank is very thin, IPPB should focus on differentiating its product and services from other payments banks to enhances its revenue and make a profit in the challenging environment. It should penetrate deep further into the rural market and should diversify into other markets to ensure its sustainability