Merchant network at the core of Fino’s small finance bank bid

livemint.com:

Subscribe to enjoy similar stories. Fino Payments Bank plans to use its network of merchants as the first set of customers to lend to, while also using them as loan collection points, if the regulator approves its proposal to convert into a small finance bank. It applied for a small finance bank licence in December 2023 and has about 1.8 million merchants who provide financial services as agents of the bank.

Rishi Gupta, managing director and chief executive of Fino Payments Bank, said in an interview that a significant portion of these merchants can be used to collect loan repayments. Gupta added that the merchants would be used as loan collection points while the bank would also cater to the credit demand of these merchants. They run the bank’s touchpoints and provide services like opening of bank accounts, cash withdrawal, and more.

The other target base is its current base of 13 million customers, he said. Fino Bank has a majority (34%) of its merchants in the eastern part of the country, 32% in the north, 21% in the west, and 13% in the south. Conceptualised by a committee headed by former RBI board member Nachiket Mor, payments banks are supposed to reach out to the under-banked and unbanked masses, accepting deposits of up to ₹2 lakh per customer.

The primary difference between them and small finance banks is that payments banks cannot lend. There are six such banks and include Airtel Payments Bank, Fino Payments Bank, Jio Payments Bank, India Post Payments Bank, NSDL Payments Bank and Paytm Payments Bank. “Some questions have started to come from RBI and we are answering them as they come.