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Post office solutions: the challenges facing India Post Payments Bank

The new India Post Payments Bank can hasten financial inclusion, but detailing is key

Amidst some fanfare(प्रशंसकों), Prime Minister Narendra Modi launched the India Post Payments Bank (IPPB), a financial service provider that will operate under the country’s age-old postal department. The government-owned payments bank will be able to accept deposits of up to ₹1 lakh from customers but without the rights to use these funds to advance risky loans at higher interest rates. It, however, plans to offer a variety(विविधता/प्रकार) of other financial services to people, including(समेत/सहित) the holders of postal savings accounts that are worth(क़ीमत/लायक) over ₹85,000 crore. The primary rationale(तर्काधार/मूल कारण) behind the public payments bank idea is to help in the government’s goal of achieving financial inclusion(समावेश/सम्मिलन) by providing savings, remittance(भेजा हुआ धन/प्रेषित धन), and payments services to the rural and unorganised(असंगठित) sectors of the economy. It is also hoped that the payments bank idea will help reinvigorate(पुनर्जीवित/फिर बल देना) the postal system, which has a wide network of branches across India. All the 155,000 post offices in the country are expected to be linked to the IPPB system as early as in December this year. The payments bank will also have a digital platform that is expected to make financial services more accessible(प्रवेश के योग्य/सुलभ) even from remote locations.

A big challenge facing the new public payments bank is whether it can manage to earn the profits required to survive(जीवित रहना/बना रहना) as a standalone business entity(अस्तित्व/इकाई।) Given the severe restrictions(प्रतिबंध) imposed(लगाया गया) by the Reserve Bank of India on how payments banks in general can employ their funds, the odds seem to be stacked(खड़ी/ढेर लगाना) against the IPPB at the moment. The first wave of new payments banks that commenced business last year — Airtel, Paytm and Fino — have not exactly set the market on fire. (The payments bank model, it should be noted, is still untested even though prominent(प्रमुख) private(निजी ) companies such as Airtel and Paytm have shown interest in the space.) Banks have traditionally(परंपरागत रूप से) stayed away from the business of pure deposit banking, unless customers have been willing to pay for these services, for a good reason. The IPPB promises to pay an interest rate of 4% to its savings account customers. To generate revenues(आय/राजस्व), it plans to charge fees on money transfers and other financial services while investing idle customer deposits in safe government securities in order to earn(कमाएं) interest. Whether this will be sufficient to cover interest and operational costs remains to be seen. Meanwhile, the IPPB is also likely to face stiff(कठिन ) competition from private companies, which are generally more nimble(तेज़/चालाक/चुस्त) in adapting to business realities and far more customer-friendly compared to the government-owned behemoths. And with increasing competition, the IPPB’s revenues and margins(लाभ) are also likely to come under pressure. Yet, if it succeeds, the new payments bank could usher in a new era of rapid(तीव्र/शीघ्र)financial inclusion across rural India



Important Vocabulary

1. Accessible(प्रवेश के योग्य/सुलभ)
Synonyms: available, handy, reachable, usable, attainable
Antonyms: unhandy, useless, inaccessible, limited, restricted

2.Rationale(तर्काधार/मूल कारण)
Synonyms: excuse, explanation, hypothesis, justification, motivation
Antonyms: discouragement, proof, reality

3.Remittance(भेजा हुआ धन/प्रेषित धन), 
Synonyms: amount, award, cash, deposit, disbursement
Antonyms: debt, penalty, whole

Synonyms: outstanding, arresting, beetling, bulging, easily seen
Antonyms: common, depressed, inconspicuous, invisible, obscure

Synonyms: adept, adroit, agile, bright, deft
Antonyms: awkward, clumsy, ignorant, inept, slow

6.Stacked(खड़ी/ढेर लगाना) 
Synonyms: deformed, disfigured, mutilated, unmade, abnormal

Synonyms: arthritic, creaky, rigid, solid, stark
Antonyms: bending, flexible, loose, pliable, slack

8.Reinvigorate(पुनर्जीवित/फिर बल देना) 
Synonyms: enliven, modernize, rejuvenate, renew, renovate
Antonyms: destroy, kill, ruin, depress, discourage





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