When the big boys of banking were hobbled by a lending moratorium, ICICI Group- and Blackstone-backed Fino Payments Bank recorded its first run of profits in consecutive quarters, riding the surge in digital transactions during the lockdown.
Fino expects to complete Rs 60,000 crore worth of transactions in the first half of FY21, up 36% from Rs 44 000 crore in the same period last fiscal. Transaction volumes have surpassed pre-Covid levels, largely due to cash withdrawals in rural areas.
As a result, the company posted a net profit for the second consecutive quarter in the three months to June of Rs 1.9 crore from a net loss of Rs 10.9 crore a year ago. March 2020 was the first time it posted a net profit of Rs 1.3 crore.
"We have been beneficiaries of a surge in transactions during and post lockdown as banking services have been more localised and people in rural areas have accessed our network to access government cash transfers," said CEO Rishi Gupta.
In the past one year, Fino has doubled its customer touchpoints to 2.76 lakhs. These include neighbourhood kirana shops, mobile recharge outlets and also BPCL petrol pumps. Gupta said the bank has added more than 16,000 merchants per month since April.
As a result of this expansion Fino Payments Bank expects to maintain its profitability this year and hopes to achieve a return on equity of 15% by March 2021 from a negative number in March 2020.
"There is enough opportunity in India with a potential 500 million bankable population from rural areas. We expect to continue to growth and make profits. The long term plan is to ultimately apply for a small finance bank license," Gupta said.
Converting to a small finance bank will give Fino the opportunity to lend, something a payment cannot do now. It will also allow it to shed the Rs 1 lakh cap per deposit account imposed on such lenders.
The central bank allows payments banks to apply for a small bank license five years after starting operations. For Fino that date comes in July 2022.
Currently, ICICI Group has a 20% stake in Fino Paytech, the holding company of the bank, state owned oil marketing company BPCL 21% and Blackstone 13.5% stake.
Sandip Ginodia , CEO
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