Fino Payments Bank (FPB) is planning to partner with two-three non-banking finance companies (NBFCs) to source loans for them in rural areas.

The bank is expecting good appetite for loans from rural India, where 80 per cent of its 4-odd lakh touch-points are located.

The payments bank, which started operations in July 2017 and turned profitable at the operating level in FY2020, will be running a few pilots with the NBFCs. FPB will earn fees by arranging loans for its customers from these lenders.

Rishi Gupta, MD and CEO, observed that some credit demand will emerge post-Covid-19. So, FPB will tie-up with a few NBFCs to meet this demand, especially in the rural side.

Rural credit demand

“To my mind, the rural sector should do better, as the agriculture and allied sectors is looking better vis-à-vis the industry in the current lockdown situation. The rural sector should continue to do better in the post-Covid-19 scenario also.

“So, demand for credit will be there. Hence, we are trying to work with some partners to see if we can develop some products for this particular segment,” he said.

The loans that FPB will originate for NBFCs will largely be small-ticket loans for micro and small enterprises.

Gold loans

Gupta expects demand for gold loans to go up once the nationwide lockdown is lifted. FPB originates gold loans for ICICI Bank.

“It (gold) is a very secure commodity. The price of gold has gone up by 30 per cent in the past few months. So, once the lockdown is lifted, gold loan could be a product where there could be demand,” he explained.

FPB is poised to originate loans as it has doubled its network from less than a lakh in FY2019 to close to 2 lakh points by the end of FY2020, with around 80 per cent presence in rural areas, emphasised Gupta. The bank expects to increase the network to 10 lakh outlets over the next 24-30 months.

In FY2020, FPB facilitated over ₹1-lakh crore worth of transactions, doubling on the previous fiscal’s throughput, the bank said in a statement. In terms of volume, its transactions have almost doubled from 19.5 crore in FY 2019 to over 38 crore in FY2020, it added.

In FY2020, FPB’s current account and savings account (CASA) jumped 78 per cent year-on-year to ₹222 crore against ₹125 crore in FY18-19.

A payments bank is a differentiated bank which can accept demand deposits — current deposits and savings bank deposits — from individuals, small businesses and other entities; issue ATM/debit cards; provide payments and remittance services through various channels including branches, ATMs, business correspondents (BC) and mobile banking; and function as the BC of another bank.

Such banks can undertake other non-risk, sharing, simple financial services activities, not requiring any commitment of their own funds, such as distribution of mutual fund units, insurance products and pension products. It can also undertake utility bill payments on behalf of its customers and general public.

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