Small-ticket loans, higher deposit limits can enhance payments bank viability: Fino PB MD
Allowing payments banks to offer small-ticket loans and enabling them to accept deposits of more than ₹2 lakh could help the payments bank model become more commercially viable, Fino Payments Bank MD and CEO Rishi Gupta told businessline. Under the existing guidelines, payment banks cannot lend on their own books or accept deposits of more than ₹2 lakh from each customer.
“For payments banks players who cannot convert to a small finance bank (SFB), I think if there is some opening up of payment bank regulation wherein they can accept higher deposits or offer small ticket loans would help all of us to make the model more commercially viable and service the customer better,” he said.
Gupta said that when the RBI issued guidelines related to payment banks in 2014, the regulator wanted to promote the creation of an online payment ecosystem as cash was dominant in transactions. However, digital transactions have rapidly increased now, and there are lakhs of customers and merchants that payment banks cater to each day.
“So the natural objective of the RBI has largely been met by players including payments bank,” he said. “Now the question is from here to where because payments bank ecosystem has got saturated. The revenue flow for payments bank are very limited due to existing guidelines,” he said.
Fino Payments Bank’s average deposits grew 34 per cent year-on-year (y-o-y) to Rs 1,696 crore and are expected to continue growing by 35-40 per cent in H2FY25.
SFB license
Fino Payments Bank had applied for a SFB license with the RBI in December last year, Gupta says, and the regulator is engaging with the payments bank for the same.
“Normally, you get 18 months after receiving in-principle approval to start operating as SFB. In that period there are multiple tasks the bank must complete which includes building technology, raising capital if required, build products and team,” he said.
Gupta said Fino already has a large distribution network and is sufficiently capitalised. The payments bank is now re-inventing its technology stack, which should become active in the next six months.
“As far as product is concerned, we are working with some non-bank lenders also. We have started to pilot products around gold loans, merchant loans, consumer low-ticket loans and some kinds of LAP (loan against property) product. As far as team is concerned, we have few people who help us with lending partnerships. We will build the team as we go forward,” he said.
“So looking at all this, we expect that within one year of getting in-principle approval, we should be in a position to launch the bank, in comparison to 18 months which is normally provided to bank as such,” he added.