Our country has the biggest public service through Post Offices in every nook and corner of the country. Started in 1776 with the idea mooted by Warren Hastings, Lord Clive started post offices which were then called Company Mail.
On 1st April 1882, the first Post Office Savings Bank account was started, and by the end of 1883, there were 4,066 Post Offices handling 39,129 SB Accounts. Later, it spread to 1.55 lakh post offices, covering 89% branches in rural areas.
Seeing the vast potential, a proposal for starting a commercial bank was submitted to the Union Government. There was expectation that in the 2014 interim budget, an announcement with allocation of funds for a Universal Postal Bank of India would be made. P. Chidambaram failed to do that.
The new Government under Narendra Modi issued a licence for a Payment Bank instead of a Universal Bank which could give
Home loan rates by India Post Payments Bank (IPPB)
loans also. Instead of 1,55,000 post offices, only 650 branches and 3,250 post office access points were announced on 1st September 2018 by the Prime Minister. Airtel Payment Bank was started nationally by Sunil Bharti Mittal in 2016 itself.
Now Airtel Payment Bank has 5,00,000 neighbourhood banking units and more than 155 million users. On the contrary, IPPB has 90 million users.
Though it was announced that 1,55,015 post offices and 3,00,000 postmen will provide doorstep banking services, it has not been done.
As no loans can be provided by a Payment Bank, IPPB has become an agent of Axis Bank, FIBE, HDFC Bank and Aditya Birla Capital Ltd for personal loans. For housing loans, it is an agent or loan referrer or loan partner for HomeFirst Finance, where the interest rate is from 10.5% to 14%, and loan against property from 14% to 17%. It also refers loans to Aadhar Housing Finance, Axis Bank, HDFC Bank and Aavas Financiers Ltd, all of them in the private sector.
Please note that State Bank of India provides housing loans starting from 7.5% interest. Axis Bank and HDFC Bank housing loans start from 8.5% and above, and the non-banking finance companies who partner with IPPB charge 12% and more.
Personal loan rates by India Post Payments Bank (IPPB)
What is more shocking is that the IPPB has signed a strategic partnership with Aditya Birla Capital Ltd, a small NBFC. This will help the private lender to use the services of the present number of 1,64,972 post offices and lend its customers at a high rate of interest. More such are likely to come.
IPPB could have become the biggest public sector bank serving people in their 89% rural branches. Instead, it’s given on a platter to the private sector to exploit. By reducing branches in public sector banks and drastic deduction of staff in comparison to business growth, the GOI and RBI together are working hard to squeeze the poor and middle class and enrich the super-rich. Not even murmurs are heard. Will the Parliament at least take up this issue seriously?
Thomas Franco is the former General Secretary of the All India Bank Officers’ Confederation and a Steering Committee Member at the Global Labour University.
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