New Delhi: India Post Payments Bank is gearing up to provide its financial services through all of 1.55 lakh post offices and 3 lakh employees by the end of 2018 -- which will create India's second-largest payments bank in terms of reach.


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"We will have post bank footprint in every district by March 2018, and before the end of the calendar year, all 1.55 lakh post offices and every postman and grameen dak sevak, which is another 3 lakh, will be equipped with a device which will provide full range of payment solutions that we will be hosting," India Post Payments Bank (IPPB) Chief Executive Officer A P Singh said at an event organised by United Nations on Financial Inclusion.


In the private space, Airtel Payments Bank, launched in January this year, started operations with a network of 2.5 lakh merchants.


Payments banks can accept deposits of up to Rs 1 lakh per account from individuals and small businesses.


The new model of banking allows mobile firms, supermarket chains and others to cater to banking requirements of individuals and small businesses. It will be set up as a differentiated bank and will confine its activities to acceptance of demand deposits, remittance services, Internet banking and other specified services.


IPPB offers an interest rate of 4.5 percent on deposits up to Rs 25,000, 5 percent on Rs 25,000-50,000 and 5.5 percent on Rs 50,000-1,00,000.


"While our private sector counterparts will, I take it very positively, skim the market from the top, you need someone who works bottoms up. That is our choice," Singh said.


He said that similar to State Bank of India that was created to take banking to people, IPPB is going to take digital payments to masses.


At the event, Telecom Regulatory Authority of India Chairman R S Sharma said transaction cost on digital payment should be very minimal and it should be made affordable.


IPPB, according to Singh, will use Aadhaar as payment address of an individual, indicating that the postal bank may bring the transaction charge close to 1 paisa.


"We will convert it (Aadhaar) into payment address. We will get this activated by offering a host of payment services," Singh said.


"We have taken up the challenge on ourselves as to how we make a Rs 10 transaction viable. Aadhaar authentication cost less than 1 paisa. There is no reason why a payment transaction should be transacting anything more," Singh said.


At present, private players and even public banks charge transaction fee even on digital payments, depending on the nature of the transaction.