The controversy surrounding the resignation of the former Chairman of HDFC—the country's largest private bank—had barely subsided when the Comptroller and Auditor General (CAG) of India exposed yet another instance of banking negligence. In its recent report, the CAG highlighted serious flaws in the operational mechanisms of India Post Payments Bank (IPPB), stating that the bank opened numerous accounts without verifying mobile numbers and linked the details of multiple customers to a single mobile number.

The CAG audit revealed that a significant number of accounts at IPPB are either dormant or underutilized. The report notes that accounts were opened without verified mobile numbers, and multiple Customer Information Files (CIFs) were linked to a single mobile number—a practice indicative of systemic weakness. The CAG further observed that the utilization of the bank's doorstep banking services remained limited; numerous requests for such services either remained pending, were cancelled, or went unaddressed.

**Expansion at the Expense of Regulations**

According to the report, while India Post Payments Bank has made strides in expanding its network and growing its customer base, its effectiveness in promoting financial inclusion has been hampered by operational, regulatory, and systemic issues. This essentially implies that while the bank achieved growth, it did so by flouting established regulations. Consequently, this has heightened the risks regarding customer security and the safety of their personal information.

**Lagging in UPI Services**

Furthermore, the bank's performance in the realm of Unified Payments Interface (UPI) services was also found to be lackluster. According to data from the National Payments Corporation of India (NPCI), IPPB's technical decline rate stood at 3.29 percent in 2021–22 and rose to 7.82 percent in 2022–23—figures significantly higher than the Reserve Bank's stipulated target of less than one percent. During the financial year 2023–24, IPPB's UPI services experienced a cumulative downtime of 362 hours—a figure substantially higher than that of other payment banks, such as Fino (19 hours), Airtel (52 hours), and Paytm Payments Bank (zero hours). 

Upholding Customer Trust
The CAG has recommended that the IPPB implement a robust monitoring framework and an effective feedback mechanism to ensure compliance with standards related to UPI transactions, thereby upholding customer trust. Given that the IPPB operates entirely under government control, such mishandling of—and negligence regarding—customers' private information directly calls into question the bank's operational integrity. Following the CAG's report, the RBI is certain to tighten its regulatory oversight.

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