Dessertation report

On

A study of “Awareness of Indian post payment Bank”

Master of commerce
M.com(Finance)

Submitted by
Nisha
231145045012
Under the supervision
Dr. Mohd. Furqan Malik

Department of Economics and Finance

Bundelkhand University Jhansi
 Certificate

This is to certify that I student to m.com finance 2023 -2025 batch student of Bundelkhand
University Jhansi has done a Major research project titled “Awareness of Indian Post
payment Bank”.

Under the guidance and supervision and submitted the report as laid down .

The materials that have been obtained from other source are duly acknowledged in the
report we consider this work worthy for the partial fulfilment of degree of master of
commerce

Under the guidance

Dr. Mohd. Furqan malik

Institute of economics & finance

 Declaration

We have by declare the parent that the presented report titled “Awareness of Indian Post
payment Bank” prepared by has under the guidance of Mohd .Furqan Malik .

I also solemnly confirm that the report is only prepared from my academic requirement and
not for other purpose.

The empirical findings in this report are true to the best of my knowledge

Nisha

M.com(finance)

Institute of economics & finance

Bundelkhand University Jhansi

 Acknowledgement

I would like to express our special thanks of gratitude to our teacher who gave us wonderful
opportunity to do this project on the topic “Awareness of Indian Post payment Bank” doing a
lots of research and we come to know about so many new things we are really thankful to
them.

I would like to thankful to my parents my friends who have boosted me up morally with their
continuous supports helped us a lot in financing this project with in the limited frame.

I like to thank all my supporters who have motivated me to fulfill their project before the
timeline.

At last l am thankful to God all mighty for showing his blessings upon me.

Nisha
M.com ( Finance)
Institute of economics & finance

Bundelkhand University, Jhansi

 Index

Chapter particular Page No

Certificate II
Declaration III
Acknowledgement IV
1. Introduction 1-2
History 3
Evolution 4-6
Key features 7
Significance of study 8
2. Review of literature 9-10
3. Scope of research 11-14
Challenges faced 15-16
4. Data analysis 17-27
5. Findings 28
6. Conclusion 29
7. References 30
Introduction

Indian Post Payment Bank (IPPB) was established with the vision of building. The most
accessible, affordable, and trusted bank for the common man. Leveraging the vast network
of the India Post, IPPB aims to bring banking services to the doorstep of every Indian, thereby
promoting financial inclusion and digital banking across the nation.

The Indian Post Payment Bank (IPPB) is a government-owned payment bank in India,
established with the aim of providing affordable banking and financial services to all citizens,
especially those in rural areas. It leverages the vast network of India Post to offer banking
services, including savings and current accounts, remittances, bill and utility payments, and
more, making banking accessible to the masses.

Objectives of Indian post payment Bank

The objectives of the Indian Post Payment Bank (IPPB) are multi-faceted and revolve around
financial inclusion, leveraging technology, and providing convenient banking services to all
citizens, especially those in underserved areas. Here’s a detailed breakdown:
Financial Inclusion: IPPB aims to bring banking services to the doorstep of every Indian,
particularly in rural and remote areas where traditional banking infrastructure is lacking. By
leveraging the extensive network of India Post, IPPB endeavors to reach the unbanked and
underbanked population segments.

Accessible Banking: The primary objective is to provide accessible and affordable banking
services to all sections of society, irrespective of income levels or geographic location.
Through its network of branches, business correspondents, and digital platforms, IPPB
strives to make basic banking services within easy reach of every citizen.

Technology Integration: IPPB focuses on leveraging technology to streamline operations,

enhance customer experience, and offer innovative financial solutions. By adopting modern
banking technologies, including mobile banking, internet banking, and digital payments,
IPPB aims to provide convenient and efficient banking services.

Customer Convenience: Another key objective is to prioritize customer convenience by

offering a range of banking products and services tailored to meet the diverse needs of
customers. This includes savings accounts, current accounts, remittance services, bill
payments, insurance products, and more, all designed to simplify financial transactions for
individuals and businesses.

Financial Literacy and Awareness: IPPB is committed to promoting financial literacy and
awareness among its customers, empowering them to make informed decisions about their
finances. Through educational initiatives and outreach programs, IPPB seeks to improve
financial literacy levels and foster a culture of prudent financial management.
Collaboration and Partnerships: IPPB collaborates with various government agencies,
financial institutions, and private sector entities to expand its reach and offer a wider range
of banking services. By forging strategic partnerships, IPPB aims to leverage synergies and
enhance the scope and quality of its offerings.

The Indian Post Payment Bank is driven by the overarching goal of inclusive growth and
socioeconomic development, aiming to transform the landscape of banking and financial
services in India by extending the benefits of modern banking to all sections of society.

History of IPPB

The India Post Payments Bank (IPPB) was launched in 2018 by the Indian government. It
operates under the Department of Posts, Ministry of Communications. IPPB was set up with
the aim of providing banking services to people in rural areas and those who don’t have
access to traditional banking services. It leverages the vast network of India Post offices
across the country to provide services like savings accounts, money transfers, bill payments,
and more.

In January 2017, the India Post Payments Bank Limited (IPPB) was incorporated as a public
limited company under the Department of Posts, Ministry of Communications, Government
of India. It was established with the objective of leveraging the extensive postal network of
India Post to provide financial services, particularly in rural and remote areas where
traditional banking infrastructure is lacking.

IPPB conducted pilot operations in various regions across the country to test its systems and
processes. It also collaborated with various organizations to offer services such as domestic
remittances, bill payments, and mobile recharge facilities.
In September 2018, Prime Minister Narendra Modi officially launched IPPB nationwide. The
bank started offering savings accounts, current accounts, money transfer services, and
third-party financial products like insurance and mutual funds. It aimed to bridge the gap
between banking services and the rural population, providing them with access to affordable
and convenient banking solutions.

Since its launch, IPPB has continued to expand its services and reach, partnering with other
financial institutions and government agencies to enhance financial inclusion and promote
digital transactions across the country.

Evolution of Indian post payment Bank

The India Post Payments Bank (IPPB) was launched in 2018 by the Indian government. It
operates under the Department of Posts, Ministry of Communications. IPPB was set up with
the aim of providing banking services to people in rural areas and those who don’t have
access to traditional banking services. It leverages the vast network of India Post offices
across the country to provide services like savings accounts, money transfers, bill payments,
and more.

The history of the India Post Payments Bank (IPPB) dates back to August 2015 when the
Reserve Bank of India (RBI) granted “in-principle” approval to 11 entities, including India
Post, to set up payments banks in India. These banks were envisioned to offer basic banking
services, especially targeting the unbanked and under-banked population of the country.

In January 2017, the India Post Payments Bank Limited (IPPB) was incorporated as a public
limited company under the Department of Posts, Ministry of Communications, Government
of India. It was established with the objective of leveraging the extensive postal network of
India Post to provide financial services, particularly in rural and remote areas where
traditional banking infrastructure is lacking.

IPPB conducted pilot operations in various regions across the country to test its systems and
processes. It also collaborated with various organizations to offer services such as domestic
remittances, bill payments, and mobile recharge facilities.

In September 2018, Prime Minister Narendra Modi officially launched IPPB nationwide. The
bank started offering savings accounts, current accounts, money transfer services, and
third-party financial products like insurance and mutual funds. It aimed to bridge the gap
between banking services and the rural population, providing them with access to affordable
and convenient banking solutions.

Since its launch, IPPB has continued to expand its services and reach, partnering with other
financial institutions and government agencies to enhance financial inclusion and promote
digital transactions across the country.

The evolution of postal services in India can be traced back to ancient times when royal
messengers were employed to deliver messages. However, the modern postal system in
India began during British colonial rule.

1854: The East India Company established the first postal system in India. It was initially
limited to large cities and major trading centers.

1861: The Indian Post Office Act was enacted, formalizing the postal system’s structure and
operations. The first postage stamps, known as “Scinde Dawk,” were issued in Sindh (now in
Pakistan) in 1852 and became valid for postage throughout India.

1870s: The railway network expanded across India, facilitating faster mail transportation.
This led to the introduction of the “Mail Train” service for transporting mail and parcels.
1884: The Indian Postal Union was formed, enabling India to join the Universal Postal Union
(UPU) in 1876, facilitating international mail services.

1907: The first Aerial Mail Service was introduced in India, connecting Allahabad and Naini
Junction.

1947: India gained independence from British rule, and the postal system was nationalized.
The Department of Posts was established, becoming the primary provider of postal and
telecommunication services in India.

1959: The Postal Index Number (PIN) system was introduced to simplify and expedite mail
sorting and delivery.

1986: India Post introduced Speed Post, a high-speed postal service for domestic and
international mail delivery.

2004: The Electronic Indian Postal Order (e-IPO) service was launched, allowing users to
purchase postal orders online for various purposes such as fee payment, RTI applications,
etc.

2011: India Post launched the “Project Arrow” initiative to modernize post offices, improve
service quality, and enhance customer experience.

2015: The Reserve Bank of India (RBI) granted approval to the Department of Posts to
establish the India Post Payments Bank (IPPB) as part of the government’s financial inclusion
efforts.
2018: The India Post Payments Bank (IPPB) was officially launched nationwide, offering
banking services through post offices to promote financial inclusion and digital payments in
rural and remote areas.

Throughout its evolution, India Post has played a crucial role in connecting people,
facilitating communication, and providing essential services to citizens across the country.

Key features of payment Bank

The Indian Post Payment Bank (IPPB) is designed to provide banking services to people in
remote areas. Key features include:

• Financial Inclusion: It aims to reach the unbanked and underbanked population by

leveraging India Post’s extensive network.

• Savings Accounts: Offers regular savings accounts with competitive interest rates.

• Accessibility: Allows customers to access banking services through post offices,

mobile banking, internet banking, and ATMs.

• Digital Payments: Facilitates digital transactions, including bill payments, fund

transfers, and online shopping.

• Government Schemes: Provides access to government schemes and subsidies

directly into customer accounts.
 • Doorstep Banking: Offers doorstep banking services for the elderly and differently-
abled individuals.

• Insurance Products: Offers insurance products such as life insurance, health

insurance, and pension plans.

• Partnerships: Collaborates with other financial institutions and agencies to expand

its reach and services.

Significance of the study

It is exploratory research, and its purpose is to explore the business model of payments
banks, as well as their operations and the means through which payments banks generate
revenue. The research will contribute to a better understanding of the difficulties and
obstacles that IPPB faces in the provision of its services. The research also analyses the
impact of socio-demographic characteristics on the levels of awareness and literacy level of
respondents, as well as conducts an assessment of the degree of awareness among
individuals and the general literacy of respondents.

IPPB’s stated purpose is to increase the financial participation of underserved populations,

the majority of whom reside in rural and peripheral parts of the nation. This study aims at
finding out to better understand the role that IPPB performs in financial inclusion for the
underprivileged population, which consists of household with lower incomes. It will supply
insight into whether or not the IPPB was able to crack the code on financial inclusion. It will
assist in comprehending the issues that have arisen, as well as the areas in which IPPB may
improve, and it will provide suggestions.
 Review of literature

• Manikandan.S (2019) :- conclude that the ruler areas people are highly interested to
invest the postal saving schemes. Because peoples are think post office saving
schemes are very low risk and very easy to invest in the saving scheme. The post office
place important role of rural areas people and these schemes are very helpful to
invest low income people so they feel comfortable. Some part of people are lack of
awareness in the post deposit schemes but the higher number of people was to invest
in the first deposit scheme as the keep their assurance the people agree with the
postal saving schemes for finally the government have to create more awareness and
have to provide more interest benefit positive saving schemes.

• Mrs. SRP. Vijiya (2017) :- India post is the largest and it has most credible outreach
infrastructure in the country with its extraordinary goodwill among the people by its
network and local appearance. It is the oldest institution of the Government of India
. India post connect ruler areas with the rest of the countries and also provide banking
facilities to them. Indian people have a great faith and trust fate and trust of postal
financial services there are various financial services launched by the government
but focus is to be put on modernisation of working style and interest structure
professional approach, proper marketing of services training to the employees and
use of ICT et cetera. Awareness level of employees is needed to improve. Sivagangai
postal division has doing well to its postal customer with its 86.17% post office rural
areas can successfully provide all the bank service to the ruler people.

• Baby Saranya and Hamsalakshmi (2018) Explained the performance of Indian post
office Saving schemes in recent trendsl when comes to the postal investment
peoples are expecting more Safety and security choosing their investment in Postal
payment bank.
• Sivasakthi and Gandhimathi (2016) explained On investors’ attitude towards post
office saving Schemes. Government should create more Awareness about the post
office savings schemes among the people and also providing advertisement about
postal services. Government Need to increase the interest rates offered by the Postal
banking schemes.

• Gulammohamed and Shajahan (2016) Analysed on investment behaviour in post

office Saving schemes. The good relationship between rural areas peoples to post
offices. So post offices have to create number of saving schemes and to provide more
interest benefits.

• Senthilkumar and Desti Kannaiah (2014) Explained the problems of investors attitude
savings in post office. The author finally concluded that the majority of the investors
investing their money in the postal payment banking with the equal rights.

• Dhiraj Jain and Ruhika Kothari (2012) stated that investors’ attitude towards post
office deposits schemes.It reveals that the high level income getting people not
willing to invest their money into post payment banking.

• Dipankar (2013) stated that India Post provides Financial Inclusion services to the
Rural poor through its networks by facing so many challenges. By the provision of
reliable and safety services to the Indian Villages it can overcome the challenges.

• Anjum and Akbar(2015) The study explores the behavioral patterns of investors, who
Prefer for savings in post office savings schemes and concluded that even it has very
huge Profile in the minds of every Indians, still it require some sort of feeding.
Scope of Research

The scope of research for development study in Kalyan and Thai City from Thane district
Thane districts is vast and densely populated hence it is not possible to cover the entire
Thane district . The researchers has considered certain variables for particular research like
age of customer, income ,education of respondents ,customer needs ,availablity at basic
banking services ,timelines of services ,quality of banking services ,safety, security, use of
technology, expectation of customers, easy accessibility of banking services, etc these
factors are the researcher has tried to find out research problem and tried to find the solution
for the same.

• Data collection and sampling method

Double researches conducted in Thane reason which is geographically fast and densely
populated hence the study of customer preferences has been done by conducting survey of
150 customers in Thane reason and Kalyan city in Thane district. The primary data is
collected through which is given to respondents of Kalyan and Thane city of Thane district
.secondary data collected through the various books, research journals and websites.

Simple random sampling method is used to collect the response of respondents to make the
sample representative. Simple random sampling is scientific sampling method. Data is
collected by personally visiting the postal Bank.
RBI key guidelines for payment banks

The prudential regulatory system for payment banks (PBs) will we based on the basil
standers. File is institutions are committed to expanding SSS to financial services,
appropriate adjustments will be made to ensure that the regulations are suitable for their
unique operating model. The basil standers provide a framework for maintaining the
financial stability of banks, including guidelines for capital adequency,risk management,
and liquidity. By adopting the standards payments Bank can ensure that they are operating
under a solid foundation that promotes sound banking practices. However, given the PBs
focus on expanding financial inclusion it is important that the regulations are appropriate
and flexible enough to support the mission. These adjustments can help to ensure that PBs
continue to serve undeserved and remote populations while also maintaining the necessary
standards of the banking industry. Ultimately bus striking a balance between regulatory
compilers and innovation payments Bank can contribute to the brother goal of financial
inclusion in India.

Financial institution borrowing :

• Board payment banks and their customers will be able to borrow and land money from
each other in the call money and collateralised borrowing and lending obligation CBLO
market. But the ceiling on call money borrowings for scheduled commercial banks would
apply to these loans as well.

Loan and advance restrictions (including those imposed on lending to non banking financial
institutions)

Payment banks are restricted from lending loans to anyone, even its own management .
Although payments banks I prohibited from lending to outside parties, payment banks are
allowed to lend to they are own personal using bank money subject to limits established by
board policy.

The plural of the product;

As part of the application for a licence, payment banks are required to provide RBI with a
comprehensive list of the financial products they would like to offer. After then, PBs need to
let RBI no about any new financial product their plan to release. Depending on the particular
bycircumstances RBI may impose appropriate limitations on the products architecture
operation or other characteristics or even forced the products discontinuation.

Handling risk;

The rule for managing market risk at payment banks will be the same as those at commercial
banks. Derivatives will be allowed for use by payment banks exclusively for the purpose of
hedging foreign currency holdings resulting from operations authorised under authorised
dealer category II.

There is a Bank of India (RBI) has mandated that payment Bank submit data on operation
losses and otherwise confirm to the operational risk management rules outline for
scheduled commercial banks.

Liquidity risk management regulations for pay should be the same as those applicable to
schedule commercial banks with appropriate modifications to account for PB’s unique
liquidity risk characteristic.

The regulations for managing strategic and operational risk should be the same as those
applicable to scheduled commercial banks with appropriate enhancements to address
potential liability resulting from the employment of agents.

When it comes to ICT related elements and activities via intermediaries payment banks must
adhere to the same regulations as scheduled commercial banks in terms of internal controls
audit and compliance.

Corporate governance;

Bank holding companies or payment banks are required to adhere to the same regulations
as traditional banks. This includes regulations related to director appointments. For
converting corporation s the current directors appointments will be honoured until the end
of the standard contracts. Payment banks are also required to follow the same requirements
as commercial banks in this regard. These regulations help to ensure that payment banks
operate under the same guidelines as traditional banks promoting transparency and
accountablebility in the financial industry. By adhering to these regulations payment Banks
can continue to serve the underserved and promote financial inclusion while also
maintaining the necessary standards of the banking industry.
Bank deposits:

According to the current RBI guidelines only savings and current deposits may be accepted
by payment banks. Per the terms of the licensing guidelines the maximum amount that may
be charged to a single customer in a given period of time is limited at rupees 100000.
Nonetheless, RBI will not object if the payment banks make agreements with another
scheduled commercial bank or schedule financial banks to sweep any balances in excess
of the permitted limits into an account created for the user at that Bank. The customers prior
written approval is required before this agreement may go into effect.

The our restriction applies only to deposits from customers and not to any security or eager
money deposits the bank mein required of its service providers. All provisions of the RBI and
the banking reconciliation act and all directions issued by the RBI with respect to the
minimum balances non functional accounts unclaimed deposits (including the transfer of
such deposits to the depositors education and awareness fund maintained by the RBI on a
regular basis), nominations, cheques/drafts, etc will apply to PBs.

Evidences from branches and business correspondence of payment banks.

The extensive network of touch points established by PBs has been instrumental in
expanding financial access to Undeserved and remote region. An addition to leverageing
their parent companies infrastructure PBs has also entered into partnerships with other
entities to further widen there reach.For instance Fin payments bank has partner with the
Rajasthan state government and Bharat petroleum to expand its agent network. PB extensive
network of touch point has also proved to be beneficial for full service Bank which can use
them as business correspondence (BCs) to provide banking services in previously unviable
regions.

Furthermore ,PBs have taken advantage of technology advancements to enhance there

services and improve customer experience. For instance some PBs have developed
innovative solutions to cater to the needs of the migrant workers such as faciliating instant
money transfer and providing access to micro loans PB have also been at the fore front of
promoting digital transactions in India particularly in rural areas . This has been achieved
through various initiative such as educating customers on the benefits of digital payments
and offering incentive for adopting them. Overall PBs have played a critical role in advancing
financial inclusion in India particularly for underserve and remote population.
Challenges faced by Payment Banks in India

Bank Restrictions on Making a Payment:

Several payment banks have been approved by the Reserve Bank of India (RBI) and are now
in operation. Still, surviving in the here and now is no simple process. The obstacles they
must overcome are numerous challenges. One of them is that payment banks are not
allowed to make loans, which would provide them a Steady stream of interest income. Banks
that process payments will need to brainstorm new revenue streams.

Second, conventional commercial banks also provide Payment bank services. Competing
with them may Increase your blood pressure. The aforementioned banks are fully digital
operations. Market dominance requires unbreakable, virus-free software. The general
public has little understanding about payment banks. One of your main goals should be to
spread the word about the company to those living in both urban and rural areas. Payment
banks can’t be widely used without a reliable network. Telecom companies are the only ones
to sign up. The Post Payment Bank has been granted authorization to Use government
resources, and it operates a broad variety of branch locations.

The monetary institutions of PBs do not have a Centralized location. The agreements
wouldn’t get done without the usage of the internet. A reliable and speedy internet
connection is essential in today’s corporate world. For maximum efficiency in any given area,
a reliable wireless network with internet access is essential customers hesitant to switch.
The hesitancy of some customers to switch to digital payment methods is a new challenge.
Several consumers, even in large urban centres, are not yet Indian Post Payment Bank:
Financial inclusion revolution in India.
Findings
The Government of India’s (GoI) “Digital India” plan remains in its inception. However, the
already- prominent Indian Post Payment bank may contribute to the development of even
higher usefulness.

The financial needs of economically marginalised individuals in India’s much further regions
are not being met by the country’s centralised banking and finance system. Branch locations
of payments banks will appear there. Seventy percent of people have less than one Million
rupees ($14,000) in the bank. Banking services have mostly centered on this group.

Migrant workers, low-income families, small Enterprises, and other members of the
unorganized secctor would all benefit from payments banks’ ability to provide modest
savings accounts and payments/remittance services, as evidenced by this research.

The number of Indian post payment banks is 2.5 times larger than the conventional banking
system. Over time, The payments bank will connect all 1.55 million post Offices in the nation,
including 1.30 million in rural Areas, to provide the service. It serves rural regions by
maintaining at least one branch in each district.

Over the period of time, Indian Post Payment Banks will provide a wide variety of services,
including checking and savings accounts, money transfers (including RTGS, NEFT, and
IMPS), direct benefit transfers, Payments to utilities, and payments to businesses and
merchants.
Conclusion

Payment banks replacing other digital payment method at the prepared method of
transaction. India is making a transition to a cashless and digital economy because it is more
practical and flexible in light of current technical and economic developments. The
procedure for insurance at the marginalised communities visa section and low income
groups have access to the right financial services and product needed by them at an
affordable cost in a fat and transparent manner from contemporary institutional plans is
widely regarded as a sound strategy towards financial inclusion. This strategy 6 to ensure
that the magnet marginalise communities because section and low income group have
access to appropriate financial products and services.

However, as conventional banks face more competition from payment bank, banking
service with expand improve and become more affordable for more people. In the absence
of more data, it would be and reasonable to say that how I will payment banks performance
contrast to move season financial institution. Payment banks of Indians are unable to use
financial services of they are not eligible for welfare awards insurance from the government
banks will reach the unbaked and under banked every where. Successful payment banks
may benefit more from a culture of constant innovation and a willingness to try new things.
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