The Union Cabinet has allowed India Post to set up a payment banking facility which will also sell financial products like mutual funds, insurance and pension funds with a focus on rural, semi-urban areas, unbanked and under-banked segments. Currently, there are 1.54 lakh post offices of which 1.39 lakh are rural post offices.
We spoke to a few industry officials to see how this move will help the industry expand its footprint in smaller cities.
Swarup Mohanty, CEO, Mirae Asset feels that execution will be extremely challenging. “This is an excellent initiative to reach out to the masses in rural areas but the distribution process will be difficult. It should be first tried and tested in some urban areas before the official launch.”
Dinesh Khara, MD & CEO, SBI MF says, “To penetrate in rural areas, India Post needs to invest in skill development of their employees for distributing mutual funds. Since they will be catering to people who are not familiar with mutual funds, it is essential for them to keep investor’s interest first and educate them about different investment options.”
The IPPB will obtain banking licence from RBI by March 2017 and by September 2017 its services will be available across the country through 650 payments bank branches, linked post offices and alternative channels via modern technology including mobiles, ATMs and other digital platforms, says a PIB press release.
The IPPB will also offer basic banking facilities like opening savings or current account (with a balance of up to Rs.1 lakh), payments of direct benefit transfers, utility bills and remittances.
