Updated on: Wednesday, May 29, 2019, 03:58 AM IST

Fino Payments Bank MD & CEO Rishi Gupta: We are on track to break even


Payment banks are seen as conduit agents, a very small part of the overall banking spectrum. However, their spectrum is much larger, which is why players from all sectors are gravitating towards this segment. Fino Payments Bank, incorporated in 2017, has a group background of being a business correspondent for larger banks for over a decade, which has helped it understand the sector nuances and opportunities. Rishi Gupta, MD & CEO, explains the ambit of payment banks and their challenges; Fino’s position and plans in a discussion with Pankaj Joshi and R N Bhaskar.

Edited Excerpts:

How do payment banks evolve in view of the limitations of transactions allowed?


First, some perspective on payment banks is required. Today, the general view is that payment banks are mainly in the activity of person to person fund transfer. Actually, the legal ambit that we have is much broader. First of all, we accept deposits up to Rs 1 lakh across savings and current accounts, wherein we pay interest on savings account at the same level as, or slightly higher than, commercial full-service banks. A payments bank can also act as a partner with various entities to provide access to products and services that it cannot offer on its own – namely insurance or mutual fund selling, recharge, utility bill payments and even loan proposals through a referral programme with certified lenders in the financial system.

For the customer, what payments banks represent can be summarised in two things. Firstly, we at Fino work towards addressing the problem of accessibility of banking services, by providing a point of transaction. The banking system by and large today looks at the top 20 per cent of the population (around 250 million). We as an industry look at the other 500 million and aim to bring banking closer to them. In this context, the recent developments such as the Jan Dhan Yojana drive, Aadhaar enrolment and a good amount of technological innovations in both product delivery and connectivity, have helped banking industry.

The second is the product portfolio which consist of both savings and current accounts, remittance facilities and a range of third-party products. Access to all this with convenience and the security of dealing with an RBI-regulated entity is what a payments bank offers.


Payments banks, by nature of activity, must have a national geographic spread. In contrast, small finance banks are more likely to be concentrated in specific regions. Take for instance, remittances, the centres from which they are sent would necessarily be industrial activity hubs but the recipient locations will be totally widespread, largely in rural areas. Payments banks points are available at both the ends, facilitating remitter and beneficiary transactions.

How does Fino position itself in the sector and what is the target market at large?

Within the sector, the major players today would be Airtel Payments Bank, Paytm, Fino and new entrant India Post. There are others which are today getting their act organised and will play a part in future. Within this, Fino stands out different. This is because our financial inclusion has been our core business for over a decade, while for others this is one of the many things they do. We commenced operations through the business correspondent model and scaled up in a modular fashion.


Fino looks at emerging India as its market, which can be defined as those people with family income of Rs 1-6 lakh per annum. Such people, if at all present in the formal banking system, are today served by co-operative banks and regional rural banks. In operations, our approach is ‘Phygital’ as we term it, a blend of both physical and digital transactions. In India, as you go down the pyramid, acceptability tends more towards the physical and this trend would sustain for some time. Today, we have 2.75 lakh direct and indirect merchant points on our platform.

What are the challenges that the sector and more specifically Fino is looking at?

We would look more at the opportunities rather than challenges. The regulatory set up is still evolving and that would be a challenge. But the opportunity is really huge – extending service to 500 million people, to access financial services through the route of payments banks. Our growth rate and future targets reflect this potential.

If some regulatory modifications could come about, it would help the players in the sector grow faster. For instance, there is the upper limit of Rs 1 lakh that can be kept in an account as deposit. As of now, the percentage of people in our target audience wanting to keep more than that in their account is very low, still there is a mindset issue in certain of our customers (more on the trade side) for such a constraint being imposed on them.

Another regulation aspect is deployment of funds. Today, as a payments bank, we have to put 75 per cent of our money in Government securities and 25 per cent can be deposited in other banks. This stipulation means that we have a cap on the CASA deployment income stream.

For us, new distribution points are critical. We have to create them, as compared to a telecom player coming into the business with a formidable ground network already established. That is a challenge specific to us. For any utility services biller on-boarding, since we have aligned with NPCI and keep up with their compliances, it is directly done through the Bharat Bill Payment system with minimum time and hassle.

From a business viewpoint, our risk is operational. In terms of assets we are always a zero NPA business because lending transactions are referrals in nature and we do not carry them on our books. Today our transaction throughput size (including the business correspondents) is Rs 250 crore per day and if we are to get double in size then this would have to grow likewise to Rs 500 crore. For that, our IT and technology backbone needs to be very robust. We honestly look at ourselves as a technology company which has got a banking license for certain specific activities, with the regulatory compliance and scrutiny that the banking sector is exposed to.

How do the activity numbers look for you?

Today, 35 per cent of our revenues come from remittance business (the fee and the CASA interest spread). Income from the corporate business correspondent stream consists of 50 per cent and the remaining 15 per cent would be service income from sale of third-party products. We aim to double ourselves in size in two years’ time, wherein the corporate business correspondent stream would contribute around 20 per cent and the remaining would be split equally among the other two activities.

Regarding the path to profitability, we have started in July 2017 at which time we targeted that we would break even in around three years. Today we are very much on schedule for that to happen. At branch level we would target a break-even in 15-18 months. We have a manpower strength of around 3,500 within which 2,500-3,000 would be the field personnel.

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Published on: Thursday, December 20, 2018, 10:27 AM IST