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India Post Payments Bank likely broke even in FY23
April 28, 2023
India Post Payments Bank (IPPB) likely broke even in FY23, in the fifth year of its operation, much ahead of its target to reach the level by FY25, its CEO J Venkatramu told FE, adding that the bank is now seeking permission from the Reserve Bank of India to extend small ticket loans.
IPPB was launched on September 1, 2018, with the intent to leverage the massive network of about 155,000 postal branches across the country to provide doorstep banking, especially in rural areas.
Upfront hiring of a large number of people for the payment bank business, investment in constantly changing technology and zero MDR regime on digital payments means it had to incur heavy losses in the first four years.
The loss was ₹335 crore in FY21 before declining to ₹169 crore in FY22. It was hoping to break even by FY25, like any other payments bank.
However aggressive business remodelling and tapping of new fee-based services helped to turn the tide early.
“Given the kind of cost structures we have, we predicted that once we touch a revenue of say, ₹1,500 crore or ₹2,000 crore is when we expected to break even by 2024-25.
“In fact, it was expected that the payments bank model takes seven years to break even. We are currently in the process of finalising the books for FY23 and expect to break even,” Venkatramu said.
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