India Post Payments Bank (IPPB) and Reserve Bank Innovation Hub (RBIH) have joined to focus their efforts on enhancing the reach of financial solutions to large sections of society across India and enabling frictionless finance to a billion Indians.

What is Reserve Bank Innovation Hub (RBIH)?

• The Reserve Bank Innovation Hub is a wholly owned subsidiary of the Reserve Bank of India (RBI) set up to promote and facilitate an environment that accelerates innovation across the financial sector.

• The RBI has set up the RBIH as a Section 8 company under Companies Act, 2013, with an initial capital contribution of Rs 100 crore to encourage and nurture financial innovation in a sustainable manner through an institutional setup.

• The Hub has an independent Board with Senapathy (Kris) Gopalakrishnan as the chairman and other eminent persons from industry and academia as members. 

• The RBIH shall create an ecosystem that would focus on promoting access to financial services and products. This will also promote financial inclusion. 

• The Hub will collaborate with financial sector institutions, technology industry and academic institutions and coordinate efforts for exchange of ideas and development of prototypes related to financial innovations. It would develop internal infrastructure to promote fintech research and facilitate engagement with innovators and start-ups.

India Post Payments Bank (IPPB)

• India Post Payments Bank (IPPB) was set up under the department of post with 100 per cent equity owned by the government of India. 

• It was first started as a pilot project on January 30, 2017 in Ranchi (Jharkhand) and Raipur (Chhattisgarh). 

• IPPB was launched on September 1, 2018. It has expanded its strength across the country covering Post Offices, through a network of 650 IPPB branches/controlling offices, working on a hub and spoke model.

• The bank has been set up with the vision to build the most accessible, affordable and trusted bank for the common man in India. 

• IPPB aims to provide every household in India an access to efficient banking services and enable them to become financially secure and empowered.

• The fundamental mandate of IPPB is to remove barriers for the unbanked and under-banked and reach the last mile leveraging a network comprising 160,000 Post Offices (145,000 in rural areas) and four lakh postal employees. 

• IPPB’s reach and its operating model is built on the key pillars of India Stack — enabling paperless, cashless and presence-less banking in a simple and secure manner at the customers’ doorsteps, through a CBS-integrated smartphone and biometric device. 

• With a high focus on ease of banking for the masses, IPPB delivers simple and affordable banking solutions through intuitive interfaces available in  many languages. 

• IPPB is committed to provide a fillip to a less cash economy and contribute to the vision of Digital India. 

• Postmen & Gramin Dak Sevaks (GDS) have been provided the right training, technology and the devices, to convert them from just postal service providers to mobile bankers who are fully capable of providing doorstep banking services to the customers of IPPB as well as of other banks, who find accessing their banks difficult.

• The enablement of Post Offices to provide banking services has reduced the average ‘distance to a rural banking service point’ from 5-6 km (rural bank branch infrastructure) to 2.5 km (average distance to a Post Office).

Other key points on IPPB:

• Nearly 50 per cent of account holders are women. 

• Around 98 per cent of accounts opened at doorsteps of customers.

• 90 per cent of customers are from rural areas.

Significance of the collaboration

• In the last decade, the country has witnessed rapid advancement and adoption of mobile technology at low data usage cost. However, there remain large sections of the population as well as micro and small businesses that have limited access to essential financial services and expertise. 

• Universal access to finance is one of the critical requirements for society’s inclusive development. IPPB and RBIH will plan, design and execute innovative products and offerings to bridge the existing gap by bringing digitalised services at the customer’s doorstep.

How will it work?

• Under the arrangement IPPB and RBIH will plan, design and execute innovative products and offerings to bridge the existing gap by bringing digitalised services at the customer's doorstep.

• The collaboration between IPPB and RBIH will explore projects which shall have impact on the masses by leveraging the deep rural reach of IPPB-Department of Posts (DoP) to take rural finance to a billion Indians.

• Both entities will jointly work to enable access to sustainable and secure finance services to every segment of the society, through research and innovation.

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