There are times when a massive system reset is required to give a jolt to the system for it to work smoother and better. India, being one of the largest economies of the world and also one of the fastest growing ones, needed such a jolt. The current Indian government has been very pro-active in making the economy better. The success rate is highly debated across dimensions but here we present to you the analysis of one of its acts.
Indian financial ecosystem has undergone massive transformation due to the advent of the internet and common people’s access to online banking. The current government has been keen on improving the financial condition, financial inclusiveness and easy accessibility of the Indian population at the grassroots level. Digital India campaign was the backbone for bringing in internet-based processes at a massive level in India.
Finally, Demonetisation acted as the ending act of the show that kind of compelled Indian to opt for digital transactions as there was no physical cash for quite some time and this gave rise to the platforms such as Paytm, Bhim, Tez (now Google pay) and so on.
Numerous payments banks also emerged as the after effects of the demonetisation, which allowed the users to accept deposits and pay from online banks. IPPB became the fifth such entity after Airtel Payments Bank, Aditya Birla Idea Payments Bank, Fino Payments Bank, and Paytm Payments Bank to start operations after the Reserve Bank of India (RBI) gave its in-principle approval. Out of these Paytm Bank has been asked by the RBI to stop accepting any further customer application until it complies by all the rules and regulations of the RBI.
The government launched their very own India Post Payments Bank (IPPB) last year. The bank is owned by the Government of India. It operates under the Department of Posts, Ministry of Communications, which aims to utilize all of India’s 155,015 post offices as access points and 300,000 postal service workers to provide house-to-house banking services.
Out of more than 600,000 villages in India, IPPB is present in more than 130,000 villages, which allows serving a huge population. They have already launched more than 650 branches and aims to open at least one branch in every district in India.
People do not need to hold on to cash and can use a QR card. One does not have to remember the pin number. You do not have to remember your account number. This will be the lowest costly account opening system because of Aadhaar. Within minutes, the bank account will be open and transactions will happen within fractions of minutes. The surge in internet usage and smartphone penetration among the Indian consumer has allowed the government to try new ideas, which were impossible to act upon earlier. The IPPB is the newest of the lot but has the government backing and a huge presence in the Indian market. The target audiences for this project are senior citizens, students, homemakers, urban migrants, farmer, direct benefit transfer (DBT) beneficiaries, rural influencers, kirana stores and small businesses. With this initiative, the government targets every last person who is currently devoid of a bank account. Moreover, the government is positive that the ban will be profitable by the end of 2020.