Interest rate over 7 per cent unsustainable, says Fino Paytech

Interest rate over 7 per cent unsustainable, says Fino Paytech

FPJ BureauUpdated: Thursday, May 30, 2019, 09:55 AM IST
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Mumbai: The high interest rate of over 7 per cent because of competition is unsustainable, Fino Paytech has said, stating clearly that it will not join the interest rate war for customer acquisition but focus on profitability once it launches its payments bank.

“We do not subscribe to high interest rates and free offers and feel that the business has to make sense. We are sure people also understand that these are not sustainable and are short-term ploys,” Fino Paytech MD and CEO Rishi Gupta told PTI. He was fielding a query about Airtel’s venture, which has become the first operational payments bank offering an interest rate of 7.25 per cent on deposits.

Gupta said interest rates are on way down and there is a negative return because the government securities in which 75 per cent of deposits need to be invested are yielding 6.3 per cent. There are also costs of operations additionally, he pointed out.

Also Read: FINO PayTech rolls out products to accelerate Financial Inclusion

“Fino, which applied for the final licence, is hopeful of launching its payments bank in the next 2-3 months with a network of 40,000 touchpoints and 400 branches,” he added.

The company already has 20,000 touchpoints through its legacy business correspondent network through which it serves universal banks, he said, adding that 10,000 additional points will come up through its strategic partners, including oil marketing company BPCL while it is putting up an additional 10,000 points.

The touchpoints will operate through hand-held devices while the branches will be manned by up to four people each and spread across 300 square feet. Many of the branches are already running, but it is expanding headcount and the space, Gupta said. The company will also look at scaling up the recently-launched wallet service in the run-up to the bank launch.

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