Redmine - email notification auth error

If you want to set up email notification and you are get the following error

504 5.3.3 AUTH mechanism LOGIN not available

Edit your config/email.yml
and comment out the authentication line:
#authentication: :login

Also, I found that for address value, localhost didnt work. I got the following error:
getaddrinfo Name or service not known

So either add entry for localhost 127.0.0.1 in hosts,
or what I did was just specify address value as:
address: 127.0.0.1