Fino Payments Bank, which started operations about two years ago, is likely to apply to the Reserve Bank of India (RBI) to convert itself into a small finance bank, after the banking regulator allowed such conversion last week.
While announcing the draft norms for on-tap licensing for small finance banks on September 13, RBI allowed the conversion of a payments bank to a small finance bank.
Eligible for conversion
The payments bank will be eligible for conversion as it is not backed by any industry house. RBI has barred corporate groups, which earn more than 40% income from non-financial activities, from applying for SFB licence.
In an interaction with The Hindu, Rishi Gupta, MD and CEO of Fino Payments Bank, said, “We will seriously explore the possibility [of converting into SFB]. We are studying the norms. We have to discuss the issue with the investors.”
By becoming a small finance bank, Fino will be allowed to lend. In addition, SFBs are also allowed to offer term deposits, while payments bank can only offer savings accounts that must not have more than ₹1 lakh at the end of any a given day.
Payments banks are not allowed to lend, according to RBI’s norms. The main objective of setting up payments banks was to offer remittance services to customers.
Fino is one of the few payments banks that has started full-fledged operations after obtaining a licence. Some of the entities that had received a licence dropped their plans to start a payments bank.
Turnover rises
Fino Payments Bank’s turnover increased to ₹375 crore in 2018-19 from ₹230 crore in 2017-18. It started operations in July 2017.
Mr. Gupta said Fino Payments Bank plans to turn profitable at the operating level by the end of this current fiscal year. Currently, Fino Payments Bank is witnessing transactions worth $ 1.1 billion every month and it plans to increase this by 40-50% by the end of this fiscal.