New Delhi: Ahead of the launch of India Post Payments Bank (IPPB) by Prime Minister Narendra Modi on Saturday, the managing director and chief executive officer (CEO) of the bank, Suresh Sethi, spoke to Mint about IPPB’s objectives, goals and expansion plans. The bank has been incorporated as a public sector company under the department of posts (DoP) with 100% government equity and is governed by the Reserve Bank of India (RBI). Edited excerpts from an interview:

What is the main aim of setting up IPPB?

We are looking at financial inclusion as the main mission of the bank. Our focus will be on segments that today have challenges in either accessibility or affordability. From a vision perspective, we are looking to bring the most affordable, accessible and trustworthy bank to the last mile consumer.

What are the key focus areas?

The segments that we are looking at specifically include homemakers, senior citizens, urban migrants, people in rural India, including students who come to urban areas for education and need funds. We will also be looking at unorganized retail where payments today are largely dominated in cash. We want to create a less cash system so that kirana stores and merchants would become part of the ecosystem where IPPB accounts can be used and they can interact digitally rather than accepting cash.

How will the bank benefit by operating under DoP?

DoP becomes very critical for bringing a change of this scale because of its huge physical network and human capital. Today, DoP has around 1.55 lakh points of service out of which 1.30 lakh are in rural India. Today there are around 50,000 bank branches all put together. Now, if we look at the fact that we bring in around 1.3 lakh points of service, the rural banking ecosystem will get scaled up by 3.5 times. This brings us to a very different comparison on what we can do for the last mile.

DoP has around 300,000 people out there providing postal services and our mission is to make sure that each of these people also becomes IPPB’s service provider. These are postmen and gramin dak sewaks who will also offer doorstep banking services.

DoP is going to act as our corporate banking correspondent and these will be the last mile service providers.

Any plans to scale up the number of banking agents?

I think this is a big enough number to begin with. Our biggest leverage is going to be able to make each and every of these 300,000 people financially literate to be able to advise somebody about banking services.

There is a huge amount of effort and investment going into training these people as they are now going to function as bank service providers.

What kind of investment will go into training these banking agents?

We are giving these postmen smart phones on which a mobile agent app will be installed and also a biometric device for authentication. All these applications will be connected on real time basis with our core banking system. It will meet the stringent RBI guidelines to make sure that each transaction is online. We have invested in very high-end technology capability to make sure that our applications are simple, intuitive and leveraging on RBI’s payment and settlement system, which make them affordable and help us take interoperable services to the last mile. For the launch, more than 800,000 man hours have gone into training 15,000 people out of which 11,000 will be providing banking services at the doorstep. By the end of the year, all the 300,000 people will be up and running.

RBI has been very stringent with other payment banks on the failure to meet the compliance criteria. How prepared are you on this front?

There is a lot of focus in making sure that all RBI guidelines in terms of establishing the bank are met, including creation of the right customer facing processes and compliance with end-of-day balances.

We have taken due diligence and made sure that everything is first time right. We have got requisite RBI approvals and things have been reviewed by RBI on how it is being implemented.

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