After a payments bank, the Indian postal service now plans to launch an insurance firm

After a payments bank, the Indian postal service now plans to launch an insurance firm

  • Following the launch of the India Post Payments Bank on Sep 1, the postal service plans to spin off its life insurance business into a separate unit.
  • According to Minister of Communications, Manoj Sinha, the Indian postal service will set up an insurance company by 2020.
  • The Indian postal service already dabbles in insurance through the operation of the Postal Life Insurance (PLI) and Rural Postal Life Insurance (RLPI) schemes.

After three years of planning, India’s Prime Minister Narendra Modi launched the India Post Payments Bank (IPPB) on September 1st. The payments banking service will be run exclusively by the Indian postal service, which boasts 155,000 offices all over the country, and offer savings accounts with deposits of upto ₹100,000 along with transfers and bill payments.
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With the initial operation of 650 branches prior to scaling to all post offices - which will create India’s largest banking network - and the deployment of 300,000 postmen to offer doorstep service in far-flung areas, the IPPB is expected to go a long way in helping the government achieve its financial inclusion goals. In a sign of confidence, the payments bank is receiving a 80% hike in its budget to ₹14.4 billion from the government, which expects it to become profitable in two years time.

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But a payments bank isn’t all that the Indian postal service, which falls under the Ministry of Communications, has planned. While the IPPB has the ability to cross-sell insurance products, the India Post is said to be working on the launch of an insurance firm.

According to Minister of Communications, Manoj Sinha, the Indian postal service plans to set up an insurance company as a business unit by 2020. The idea was first floated in July. A tender for the appointment of a consultancy to facilitate the establishment of the insurer is set to go live in the coming week, Sinha added.

The Indian postal service already dabbles in insurance through the operation of the Postal Life Insurance (PLI) scheme, which has been around since the late 19th century. The scheme offers life insurance services to government employees, civil servants, employees of state-owned companies and military personnel. It currently has around 4.7 million active policies. A rural complement to the scheme, Rural Postal Life Insurance (RPLI) was launched two decades ago and has since grown to nearly 15 million policies.

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Sinha explained that the Indian postal service was in the throes of an important transformation, In April 2018, the postal service also decentralised its parcels and logistic services business for the purpose of efficiency and the uptake of e-commerce.
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