Finance minister Arun Jaitley (right) being welcomed during the launch of pilot branches of India Post Payments in New Delhi on Monday.
New
Delhi: India Post Payments Bank (IPPB) launched on Monday by the Union finance
minister Arun Jaitley is the second payments bank to commence its operation in
the country after Airtel Payments Bank (APB), which was launched on January 12.
IPPB
has been set up as a 100% Indian government-owned public limited company under
the department of posts with the aim to open around 650 new branches in postal
district headquarters.
Currently,
the department of posts has an existing network of around 1,55,000 post
offices. The new branches will be co-located with the existing post offices.
On
Monday, it launched services on a pilot basis in Raipur and Ranchi.
APB,
on the other hand, is a joint venture between phone services provider Bharti
Airtel Ltd and Kotak Mahindra Bank Ltd. The payments bank went live with a
network of 250,000 banking points. In the pilot phase, the bank added over 1
million customers, according to a statement by the company.
As
mandated by the Reserve Bank of India (RBI), the new model of banking focuses
on providing basic financial services such as all kinds of payments; including
social security payments, utility bill payments, remittance services, current
and saving accounts up to a balance of Rs1 lakh, distribution of insurance,
mutual funds, pension products and acting as business correspondent to other
banks for credit products especially in rural areas and among the underserved
segments of the society.
However,
there are distinct differences in the business models of both the payments
bank. Mint compares the charges levied and interest rates offered by both the
payments banks for rendering different services, including deposits and
withdrawals.
APB
charges Rs5 to Rs25 for cash withdrawals less than Rs4,000 and 0.65% of the
withdrawal amount which is equal to or greater than Rs4,000. IPPB does not
charge anything for cash withdrawals from its branches and ATMs. However, it
charges Rs15-35 for rendering doorstep banking (cash based) for both deposits
and withdrawals up to Rs10, 000.
The
remittance charges levied by both the banks also differ. APB lists charges for
transactions made through internet banking, through the app and USSD
(Unstructured Supplementary Service Data) or *99# whereas IPPB also recognizes
transactions through NEFT (National Electronic Funds Transfer), IMPS
(Immediate Payment Service), AEPS (Aadhaar enabled payments system) and UPI
(Unified Payments Interface).
Only
transactions up to Rs10, 000 is permitted through AEPS which is free. According
to IPPB, banking charges at branch and doorstep for each NEFT based transaction
ranges from Rs2.5-5 and Rs5 is charged for every transaction via IMPS.
APB
charges 0.5% of the amount transferred within its payments bank whereas 1% of
the amount transferred is charged for transfer of funds from APB to other bank
accounts through banking points.
Customers
of IPPB can withdraw amount up to Rs10,000 from an ATM in a single transaction
and up to Rs25,000 per day. APB, on the other hand, has set Rs10 as the minimum
cash withdrawal amount, there is no clarity on the upper limit to cash
withdrawals.
APB
offers an high interest rate of 7.25% p.a. on deposits on savings accounts
which is higher than the interest rate offered by traditional banks on fixed
deposits.
IPPB’s
interest rates have been fixed as 4.5% if the quarterly average balance is up
to Rs25,000, 5% if it is between Rs25,000 and Rs50,000, and 5.5% if above
Rs50,000/-.