Fino Payments Bank which began its operations on Monday, has set a target of garnering ₹10,000 crore in deposits in the next three to five years, says Rishi Gupta, MD & CEO, in an interview. Edited excerpts:
Many are not convinced with the business model of payments bank since lending is disallowed. What is your revenue model?
We don’t look at payments bank from the point of view of [a] transaction bank only. We look at it from a full customer delivery approach. Apart from opening branches, we are setting up customer touch points in the country with better technology and service for the convenience of the customers.
So far as our revenue model is concerned, on the corporate side, we are working with many banks providing them corporate banking services.
On the retail side, we are setting up a franchise for deposits so that we can build up a deposit base. The first target is to reach ₹10,000 crore of deposits in the next 3 to 5 years. As a payments bank, we can raise deposits up to ₹1 lakh per customer. That is one business that we have to learn.
We are already doing remittance business, that business is growing. We expect to earn fees from cross selling insurance products. We also have experience as a business correspondent (BC) and regulations allow us to facilitate lending on behalf of a bank which also earns us a fee. All of that [is] going to make the bank profitable.
When do you expect to break even?
We expect that within 2-3 years we will become profitable.
What is the shareholding pattern for the bank and the holding company?
Fino Payments Bank is a 100% subsidiary of Fino Paytech which is the non-operative holding company. ICICI Group and BPCL are the two large strategic shareholders of Fino Paytech. While BPCL has 21% stake, ICICI Group has 19.5% stake. Some of the other investors are Blackstone, IFC, Union Bank, Indian Bank, Corporation Bank, LIC and Exide Life Insurance.
Some entities that received payment bank licence are backed by a telecom player. But Fino is not. Do you see this as a challenge?
We are backed by two large companies, one is the largest private sector bank and the other is one of the largest oil marketing companies — BPCL. We would love to have a telecom partner but unfortunately most of them have their own licences [for payments bank].
How will BPCL’s partnership help?
Everybody has to go to a petrol pump, either as an owner of a car or as a co-passenger. So, when they see financial services offered in the pump, they can avail those while refuelling. Eventually, all the BPCL petrol pumps will be providing our banking services.
What is the branch expansion plan?
We have already 410 branches as we speak. We want to take it to 1000-plus over the next three years. However, the idea is not to become too capital intensive.
Will you offer more than 4% interest on savingsdeposits?
We will offer 4%, not more than that. The customer is worried about better services, not about higher interest on savings.
What is the next milestone that the bank wants to achieve?
Either mobilising ₹10,000 crore deposits or becoming profitable, whichever happens earlier.
When do you want to go for an initial public offering (IPO)?
We will go for an IPO when we are in a comfortable position on profitability. When we [have] built a deposit base and [are] growing on a quarterly basis, that is the time we will go for an IPO.
