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Corporate Report

Published on: June 3, 2020, 5:34 p.m.
Charting inclusive growth
  • A Fino Payments Bank branch in Jasola village

By Arbind Gupta. Assistant Editor, Business India

Mumbai-based Fino Payments Bank has shown a remarkable degree of adaptability and has come up with various measures and innovations to face recent challenges.

The payments bank recently announced that it turned profitable at the operating level for FY20 – achieved within three years of starting operations in July 2017. This makes Fino the only standalone profitable payments bank that works solely on RBI’s financial inclusion mandate by improving banking access predominantly in rural India. The payments bank processes around Rs1 lakh crore worth of transactions annually.

Despite having suffered an 80 per cent slump in its monthly remittance business in the initial days of the lockdown, Fino has recovered quite well and currently its remittance business has improved to over 40 per cent of the pre-lockdown level, and is looking to get to the pre-lockdown level in the next couple of quarters. The payments bank’s monthly remittance throughput was hovering around Rs4,000-4,500 crore in the pre-lockdown period.

The remittance business accounts for almost 45 per cent of its overall monthly business which is currently down by around 35 per cent from Rs10,000 crore in the pre-lockdown time. In the next couple of months, the bank’s overall business is set to reach about 80 per cent of the pre-lockdown value, aided by rise in DBT (Direct Benefit Transfer) transactions and the customer convenience of using Fino’s network. Moreover, the bank is expected to recover faster in the coming weeks as the overall situation heads for a new normal scenario, backed by a series of initiatives announced by the government and other stakeholders.

Fino too has initiated an array of measures recently in order to sail through this Corona-afflicted condition. These include among others optimising the capability of its existing network of staffs and merchants towards a greater and easy access to banking, to providing doorstep cash withdrawal services. In fact, since the lockdown in the last week of March 2020, the payment bank has facilitated micro ATM and Aadhaar-enabled payment system (AePS) withdrawals of close to Rs4,000 crore – largely due to fund withdrawals by DBT beneficiaries. The advantage of Fino’s merchant points is that customers of any bank can come and transact using either a debit card on a micro ATM or through AePS.

Amidst this challenging and unprecedented situation, we have initiated multiple measures to mitigate the challenging market scenario. Backed by technological and other interventions, we have managed the situation quite well. In fact, our transaction-led business model helped us withstand the current business environment with minimal impact. Going forward, we are looking to make a strong comeback and will pursue our mandate of financial inclusion in a more profitable and determined manner,” says Rishi Gupta, 51, MD & CEO, Fino Payments Bank.

The Corona crisis hit the market at a time when the payments bank had just pulled off a remarkable performance by clocking its first ever profitability in the last quarter of FY20 and preceded it by achieving an operating level profit in the second quarter of the fiscal. Despite micro and macro level challenges (even before the Corona crisis) in the changing payments and banking landscape in the last few years, Fino seems to have made notable progress.

In fact, FY20 was an eventful year for the payments bank as it turned its business profitable at the operating level. On track to becoming profitable, having reduced losses and increased revenues (YoY), the payments bank, backed by a sustainable model, closed FY20 at around Rs689 crore over Rs370 crore in 2018-19, securing a growth of over 86 per cent. The bank crossed a monthly transaction volume of Rs10,000 crore (across 30 million transactions where domestic money transfer accounts for 45 per cent) in January 2020 for the first time; a target set for five years, was achieved in less than three years. The bank began its journey in 2017 with a modest one million transaction valued at around Rs1,500 crore per month.


  • Gupta: low on liabilities


Currently the payments bank has an employee base of over 3,000 and a retail merchant network of over 4.5 lakh merchant points (own plus partners). The bank also manages the BC (Business Correspondents) banking mandate for 10 other partner banks with an additional network of over 15,000 points across India. Together, the retail and BC networks do over 30 million transactions per month.

Not having an asset product makes payments bank model risk free. We worked towards turning this perceived liability and a payments only model into an asset. Our strategic focus on having a lean variable cost model riding on digital platforms, increasing transactions and high margin products enabled us to achieve this in FY20,” states Gupta.

He further adds: “It is a path-breaking achievement for us as we demonstrated the robustness of the bank’s business model amidst challenges and showcased the success of servicing low-income mass market customers. We believe this will be a watershed moment for Fino and the first of many profitable quarters to come. We aim to take the momentum forward and continue growing at a good pace to create value for all our stakeholders.”

On its way to achieving this impressive financial performance for the fiscal year, Fino’s domestic remittance (urban to rural) transactions accounted for over 40 per cent of the FY20 throughput, making the bank a top-five player in the IMPS (Immediate Payment Service) business. The payments bank accounts for 8 per cent of India’s IMPS transactions, servicing over 25 million banking customers in the country.

Further, Fino has also played a big role in transforming the rural banking landscape by facilitating micro ATM and AePS-led digital transactions (withdrawals), which contributed to over 30 per cent to its overall business. The interoperable digital platforms allowed customers of all banks transact at Fino points leading to a four times surge in withdrawals over the previous fiscal.

Fino expects increased adoption of digital platforms by its customers, 50 per cent of whom are tech-savvy millennials. As more people experienced the convenience of banking from the Fino platform, the bank’s CASA customer base increased by over 65 per cent in FY20. The payments bank has figured consistently amongst the top 3 banks in MEITY’s (ministry of electronics & IT) digital payments monthly rankings for all banks.

Fino’s strategy is to have a strong financial services distribution network. The bank doubled its network from less than a lakh in FY19 to close to two lakh points by the end of FY20, with around 80 per cent presence in rural areas. The bank also works with more than 50 API partners that have a collective network of two lakh points. To further improve banking access, the payments bank plans to increase its network to 10 lakh outlets over the next 24-30 months.

  • Doorstep banking


The payments bank has created a pan India presence spanning 550 districts with over 4.5 lakh merchant points (2.0 lakh and 2.5 lakh partners), including around 8,000 Bharat Petroleum Corporation Ltd (BPCL) outlets. BPCL is one of the marquee names along with others such as ICICI Bank, ICICI Lombard, ICICI Prudential, Intel Capital, IFC, Blackstone Group, which invested in the payments bank’s holding company, Fino Paytech.

Following RBI’s guidelines in November 2014, Fino Paytech, which was established in 2006 as a payments technology company and corporate (BC) service provider for banks, applied for payments bank license. Fino Paytech received in-principle approval in August 2015 along with 10 other entities. It was the only recipient that had financial inclusion experience providing banking services on technology platforms, the key objective of payments banks.

After following due regulatory process, Fino Payments Bank was established in 2016 and received final license to start operations from RBI in March 2017. The payments bank started operations in July 2017 with Fino Paytech as its non-operating holding company, following most of the latter’s activities merged with the former.

Our multi-pronged approach coupled with the asset-light model, where the focus is on distribution, technology, and partnership, has been the key behind our successful journey. We will continue to carry out our efforts around these pillars going ahead as well, even as we need to tweak a few things as and when the need arises. Our aim is to achieve growth with profitability and sustainability,” says Gupta, who led the bank from the front amidst all sorts of challenges. He is also the one of the founding members of Fino Paytech Ltd, and was its CEO before taking charge of the payments bank. He leads a team focused on bringing to fruition Fino’s vision of being the universally preferred choice of customers, by fulfilling all their financial service needs.

A certified chartered accountant and cost & works accountant, he has over 25 years of experience in manufacturing, banking and international institutions overseeing cross functions ranging from budgeting, accounting, project finance, corporate finance and relationship management. His illustrious career began with Maruti Udyog Ltd where he headed the budget and MIS department. He then moved on to join ICICI Bank. Prior to joining Fino in 2006, he was with the regional office of International Finance Corporation (IFC) in New Delhi for three and a half years.

Since the lockdown in March, Fino has aggressively activated its network of staffs and merchants comprising neighbourhood stores such as local kirana shops, medical stores and BPCL outlets, and has been facilitating access to banking, especially cash withdrawals. For hassle-free movement of bank staffs and merchants, authorisation letters and identity cards have been issued. They are adhering to all the safety precautions such as social distancing, sanitizer usage and wearing masks and are also educating customers to follow the same.

  • Fino has derived its agility (which has been aptly manifested recently) from its robust business model where initiatives and measures revolve around customers

The bank’s over 4.5 lakh banking access points have been facilitating banking services to a large underprivileged rural population. In fact, these micro ATM-enabled points have emerged as critical avenues for cash withdrawal, both in urban and rural areas. “During the recent lockdown, Fino merchant points have played a critical role in far flung rural areas. They ensure access to banking and availability of cash to the masses, as well as to the beneficiaries of various government DBT schemes. Merchants also provide doorstep banking services especially to senior citizens and pensioners,” says an official.

At a time when residents in urban areas are staying home, Fino is providing doorstep cash withdrawal services. Since the start of this initiative in the first week of April 2020, more than 120 housing societies across various cities have benefited and Mumbai accounted for almost 85 per cent of these societies. “Having said that, it is not only cash withdrawals that are happening at Fino points, customers are doing other banking transactions as well, such as deposits, money transfer and pay utility bills. On the third party offerings side, we have introduced Covid-19 insurance cover for customers, which is getting encouraging response from the rural India,” adds the official.

Fino has derived its agility (which has been aptly manifested recently) from its robust business model where initiatives and measures revolve around customers. Fino’s multi-product, multi-platform and multi-location strategy based on customer centricity has made access to banking simple and convenient, and thus helped augment its business. Fino is the only entity in the space that has experience in providing technology-enabled banking services in unbanked and under banked areas.

Experts believe that unlike many of the other entities which were given licences for payments banks, the promoters of Fino have been in the banking and allied space and that has provided the payment bank the much required expertise and bandwidth to fare much better as compared to its peers. About 11 entities had received licenses from the RBI in 2015 to drive financial inclusion in the country through a Fintech approach. However, three of them surrendered their licenses in the very beginning, and one Aditya Birla Payments Bank already shut the operations in 2019. The rest – Airtel Payments Bank, Fino Payments Bank, Paytm Payments Bank, India Post Payments Bank and Jio Payments Bank – are at various stages of progression.

Experts also view that the current regulatory challenges might have disrupted the already difficult business models of the payments bank as it is nearly impossible for any banks to sustain or make money without having a lending business. As per RBI guidelines, a payments bank can only accept deposits up to Rs1 lakh but cannot directly lend to any customer or issue credit cards. They can, however, issue services like ATM cards, debit cards, net-banking and mobile banking. Payments banks make a minimal amount of money by investing customer deposits in only government securities.

Being a part of Fino Paytech, we inherit the requisite bandwidth and relevant skills to operate such operations in a much effective and efficient manner. And this is something that has gone in our favour and is getting reflected in our performance. Going forward, we will consolidate our position in the market with our proven strategy and action plans,” states Gupta, who believes that in a country like India a large group of unbanked population will continue to seek hand holding.

While digital banking is the future from a global perspective, India is a different market where assisted banking will continue to dominate. That’s the reason Fino has adopted a ‘phygital’ approach which is backed by a strong distribution, technology and partnership strategy making banking simple, convenient and paperless. It has a nationwide distribution network of over 300 branches.

  • While digital banking is the future from a global perspective, India is a different market where assisted banking will continue to dominate


Fino provides banking services to its target customers using technology platforms such as Aadhaar-enabled Payment System (AePS), mPOS devices, Micro ATMs, tablet or mobile. On the digital front, Fino offers mobile banking app BPay, net banking, Unified Payments Interface (UPI) and FASTag for toll payments.

Fino’s physical outlets enabled with digital devices facilitate assisted banking services. It has deployed close to 110,000 micro ATM devices across the country and looking to increase its number to more than 200,000 by the end of this fiscal.

Experts believe that micro ATM-led banking is the way forward for banking in rural India. Besides its app-based cash bazaar service helps digitise cash, especially in rural areas. While increasing its presence, the bank has consciously adopted a cost-effective asset-light model. It has created partnerships and collaborations with various agencies and entities in pursuit to expand its network. Fino is looking to expand its network to 10,00,000 merchant points by 2022-23. As part of its expansion plan, the bank is also looking to increase its presence in the North, South, East and Northeast.

In a move aimed at enhancing the banking experience for existing customers as well as tapping new customers, Fino has started a sweep account facility in association with Suryoday Small Finance Bank (SSFB). The facility allows customers to seamlessly transfer balance in their account in excess of Rs1 lakh to SSFB (partner bank) account. While the facility ensures RBI guidelines on Rs1 lakh deposit limit for payments banks, it also gives customers the safety of a bank account to park excess funds, which can be utilised whenever they need.

Product innovation is at the core of our strategy for enhancing customer experience. CASA plus or the sweep account, is therefore an important offering as customers stand to benefit. The introduction of this facility is in line with our vision of being the one-stop banking point for our customers and we are pleased to have SSFB as our sweep account partner. Going forward, we will explore opportunities to tap MSME customers and other segments that can benefit from our sweep account facility,” says Gupta.

Our common focus on providing the best customer experience and solutions has resulted in this partnership. Through this association, we aim to enable hassle-free and seamless services to all customers of Fino Payments Bank who will automatically become Suryoday Bank customers too. This to us is just the beginning of a relationship and we hope to offer more meaningful products to our new customers, in the near future,” says R. Baskar Babu, CEO & MD, Suryoday Small Finance Bank.

To enable the sweep account facility in their Fino bank account, customers can use both physical and digital channels of the payments bank. They can either visit any of Fino’s branches and merchant points for assisted service or use BPay to enable it on their own. In either case, the sweep account facility will be enabled only after receiving specific consent from the customer.

With all these developments in place, Fino has made meaningful progress in the payments bank space. At a time when most of its peers are somehow struggling, the payments bank has ended the last fiscal in a profitable note and is looking to take this journey forward in a similar manner. Its transactions-led business model helped it withstand the current business environment with minimal impact. In the present Corona crisis, the way Fino has shown its resilience, is certainly a commendable feat. The payments bank’s multi-pronged approach coupled with an asset-light model where the focus is on distribution, technology, and partnership, has played a big role in making its journey a successful one. Unlike many of its other peers, Fino has also benefitted from its being promoted by a larger landscape of promoters from banking as also technology space.

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