The Indian government has initiated the process of divesting its stake in the India Post Payments Bank (IPPB), which is required to go public by March 2026 to comply with the licensing regulations set by the banking regulator.
IPPB, established under the Department of Post, is currently fully owned by the government. Officials familiar with the matter have revealed that discussions are now underway to determine the extent of the Centre’s equity divestment in the payments bank.
Recently, India Posts Payments Bank (IPPB) has expressed its intention to convert into a Small Finance Bank (SFB). With a vast rural footprint and a digital-first approach, IPPB believes it is well-positioned to bridge the credit gap for small businesses, farmers, and self-help groups (SHGs).
Vandita Kaul, Secretary (Posts), has appealed to the Reserve Bank of India (RBI) and the Ministry of Finance (FinMin) to consider the proposal. She argues that a modest capital infusion of ₹200 crore could set the stage for the transition.
Payment banks are restricted from lending as per the RBI’s regulatory framework. According to Kaul, “We definitely need to move into actual credit disbursal. The only way forward for India Post Payments Bank is to become India Post Small Finance Bank.” Kaul says IPPB’s existing infrastructure—with over 70% of its branches in rural areas—already aligns with the objectives of small finance banks.
Going public is a crucial step for the India Post Payments Bank (IPPB) as it prepares to upgrade itself into a small finance bank. According to RBI guidelines, payments banks must go public within three years of achieving a net worth of ₹500 crore. “To comply with this regulation, we need to go public by March 2026,” said R Viswesvaran, Managing Director of India Post Payments Bank. “We have written to the government seeking guidance on this matter,” he added.
Listing on the stock exchange and diversifying ownership is mandatory for all payments banks, including those promoted by major telecom companies like Airtel and Jio, within three years of reaching the ₹500 crore net worth threshold. Currently, Fino Payments Bank is the only listed entity in this sector and has already applied for a small finance bank licence.
Payments banks play a vital role in promoting financial inclusion by offering savings accounts and remittance services to migrant workers, low-income households, small businesses, and other unorganised sector entities that have limited access to traditional banking channels. However, their operations are restricted—they cannot accept deposits exceeding ₹2 lakh and are prohibited from lending. In addition to providing savings and current accounts, IPPB facilitates money transfers, government direct benefit transfers, and access to credit through third-party referral services. The bank operates through one branch and 649 banking outlets, with postmen and grameen dak sevaks serving as business correspondents.
“We have achieved our primary mandate. By March 2026, we aim to reach a critical mass by opening 130-140 million savings accounts. Our aspiration now is to secure a small finance bank licence to expand our product offerings,” Viswesvaran stated. So far, IPPB has opened 112 million accounts, with 26.8 million accounts added in 2024 alone. Notably, 59% of these accounts belong to women, and about 75% are in rural India.
