Fino Payments Bank is planning to convert into a small-finance bank (SFB). The company had started to generate profits three quarters ago. Inspired by the latest internal working group report, the bank recommends allowing payments bank to convert to SFB after three years from the prevailing five years of operation. Fino is also planning to submit stakeholder comments to RBI about the issue.
Rishi Gupta, CEO of Fino Payments Bank, said that the payments bank is yet to study the progressive guidelines in detail and uncertainty exists as to whether the final guidelines would consider the suggestions put forward. TRBI, in its recent internal working group report on ownership of private banks, recommended reducing the time to three years from five years for conversion from payments bank to small finance bank. It also recommended ease in listing guidelines for small finance and payments banks. He added that the payments bank would capitalize on its current scalable and asset-light model.
As a payments bank, it has built a scalable, asset-light model, however, the bank accepts that the customers also want loans as a product but as of now the company is not able to service that. By converting into SFB the bank can offer credit to its customers and merchants. Unlike other small finance banks, that largely rely on loans to generate income, credit would be part of Fino Payments Bank’s product offering.
Gupta added that the vision of SFB and the ones in operation currently is going to be different because the SFB is not going to get the maximum income of customers through credit products. However, it will part of the bank’s suite of products over and above the current model. The lending wouldbe done on a digital platform with significant use of data analytics.
At the end of the September quarter, Fino Payments Bank has reported earnings after tax of Rs 4.5 crores. It has reported a loss in the last year for the same period. The bank had booked a profit of Rs 1.9 crores in the June quarter as well. In the September quarter, the Fino network registered a 25% growth sequentially at Rs 33000 crores, and 40% growth over the same period last year when it handled transactions worth Rs 23000 crores. It additionally posted an operating profit of Rs 13 crores in Q2 FY21.
