Is govt mulling SFB status for India Post Payments Bank? Minister replies in Lok Sabha

The government on Monday ruled out granting Small Finance Bank (SFB) status to India Post Payments Bank (IPPB), citing Reserve Bank of India (RBI) guidelines that bar government-owned entities from converting into SFBs.

In a written reply to the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said that as per RBI’s guidelines issued on December 5, 2019, for 'on tap' licensing of SFBs, government and public sector-owned entities are not eligible for such conversion.

“Banking Licences are granted by the Reserve Bank of India (RBI) as per the relevant provisions of the Banking Regulation Act,” the minister said.

“As per the guidelines issued by the RBI on 5.12.2019 for ‘on tap’ Licensing of Small Finance Banks (SFBs), entities that are owned by the Government and public sector entities are not eligible to promote or convert into SFB.”

IPPB currently operates with one branch and about 1.64 lakh access points across the country.

Asked if the government was aware of the penalty imposed on IPPB in February 2025, the minister confirmed that a monetary penalty of ₹26.70 lakh was slapped for non-compliance with certain directions issued by RBI on ‘Customer Service in Banks’.

The Department of Posts has informed that corrective measures have been taken to fix the technical issue that led to the penalty, he added.