2024-12-20 06:00:15 :
If regulators approve its proposal to transform into a small finance bank, Fino Payments Bank plans to use its merchant network as its first lending customers, while also using it as loan collection points.
It applied for a small finance bank license in December 2023 and has approximately 1.8 million merchants providing financial services as agents of the bank. Rishi Gupta, managing director and CEO of Fino Payments Bank, said in an interview that a large portion of these merchants can be used to collect loan repayments.
Gupta added that these merchants will be used as loan collection points and banks will also cater to the credit needs of these merchants. They manage the bank’s touch points and provide services such as opening bank accounts, withdrawing cash, and more. Another target group is one that currently has 13 million customers, he said.
The majority of Fino Bank’s merchants (34%) are located in the east of the country, 32% in the north, 21% in the west and 13% in the south.
A committee headed by former Reserve Bank of India board member Nachiket Mor has floated the idea that payment banks should provide services to the underbanked and unbanked masses, accepting up to $200,000 per customer. The main difference between them and small finance banks is that payments banks cannot lend. There are six such banks, including Airtel Payments Bank, Fino Payments Bank, Jio Payments Bank, India Post Payments Bank, NSDL Payments Bank and Paytm Payments Bank.
“The RBI has started raising some questions and we are answering them. If the RBI approves us, it will be in the form of in-principle recognition and we will have 18 months to actually convert into an operational bank,” Guppu Tower said. “We hope to transition within a year of approval”.
Gupta said the transformation will bring changes in three aspects: team, technology and capital. “We don’t need capital right now because we have more capital than we need. On the technology side we have migrated our old systems to a brand new Finnacle system, and on the team side we have some people who have expressed interest in joining later us.”
Gupta also said the bank would assemble the team needed for the loan.
“For collection, we also have vertical cash management services within Fino. We can collect payments from agents, and some customers will also come to our branches to deposit money.” He said that after the Reserve Bank of India approved in principle the transformation into small finance After banking, these teams will be established within 12 to 18 months.
Analysts at Nirmal Bang Institutional Equity said that while awaiting regulatory approval for the SFB license, the bank is building technology, liability and conducting some pilots around credits such as commercial loans, gold loans and partnership-based credit. loan portfolio.
They said in a note to clients: “Management stated that following the conversion to SFB, the bank will continue to derive the majority of its business (approximately 75%) from payments-based services, with the remainder coming from lending. “November 22.
Others said transforming into a small finance bank would allow Fino to develop lending operations and cross-sell other financial products. “We modeled loan revenue starting in fiscal 2027 and estimated assets under management to be $1,500 crore,” analysts at Ventura Securities Ltd said in an October 4 note.
Ventura Securities said Fino’s move into the lending business will be cost-effective and smooth, leveraging its established business network and existing technology infrastructure. However, a company like Fino operates primarily through its merchant network, which could be poached by competitors, adding that Fino has built strong relationships with its merchants, so this is unlikely to happen.
Main points
- A large part of Fino Payments Bank’s merchant network is available for collecting loan repayments.
- The bank will also meet the credit needs of these merchants.
- Another target group is one that currently has 13 million customers.
- The majority of Fino Bank’s merchants (34%) are located in the east of the country, 32% in the north, 21% in the west and 13% in the south.
- This transformation will bring changes in three aspects: team, technology and capital.
Follow us On Social Media Twitter/X
