Fino Payment Banks are Digital Banking Partners that cater to the financial needs of consumers, primarily in the villages and cities, through multiple services and products.
The Fino Payment Bank was established on 4th April 2017. It has been generously invested in by ICICI Bank, BPCL, Blackstone, and IFC Fino Payments Bank. It is currently available in 90% of Indian districts. It has over 724671 banking outlets, 54 Bank branches, and 130 Customer Service Points.
The operations of Fino Payment Banks
is based on the asset-light business model, which means every Banking outlet caters to the financial needs of its community through banking services.
The above method forms the foundation of Fino Payment Banks as it creates an assisted-digital ecosystem which is a combination of a physical and digital delivery model, also known as the “phygital” delivery model.
The Fino Payment Bank has its headquarters in Mumbai, Maharashtra. The MD and CEO of Fino Payment Banks are Rishi Gupta, and the Chairman is Prof. Mahendra Kumar Chouhan.
How is Fino Payment Bank different from other banks?
The Fino Payment Bank is very different from other banks as these mainly focus on rural and semi-urban areas of India.
Their client base is predominant in rural India, and they are the primary financial service providers in the villages and semi-urban places in India.
The aim and objective of Fino Payment Banks are to develop the financial conditions in rural India that do not have access to banks. They target customers from the low-income group who primarily reside in the villages, towns, and districts in remote India.
Traditional banking services are not accessible to low-income groups due to their wealth crunch. Hence, these people are sought by the Fino Payment Banks to get financially educated and independent to improve their economic situation.
It is an initiative taken in the hope of financial inclusion of low-income groups in our Indian Economy. Fino Payment Banks adopt the method of the business correspondent. The neighborhood merchants act as a bank for rural customers.
Due to the unavailability of ATMs or banks in rural and semi-urban areas in India, the Fino Payment Bank’s banking correspondent business has recently started gaining popularity.
The effort of financial inclusion and financial education for the rural people have made the success of Fino Payment Banks surreal. It has also paved the way for further growth of Fino Payment Banks in the rural and semi-urban areas in the country.
What are the RBI norms for Fino Payment Bank?
The various norms laid down by the RBI for Fino Payment Banks are,
- The regulatory framework of Fino Payments Banks will follow the Basel standards.
- The Fino Payment bank will maintain a minimum investment of more than 75 percent of demand deposit balances (DDB). It will also maintain balances in demand and time deposits similar to commercial banks, which should be less than 25 percent of its DDB (including the earnest money deposits of BCs) on three working days before that day. The investments and deposits made according to the conditions above shall not be less than 100 percent of the DDB (including the earnest money deposits of BCs) of the Fino Payment Banks unless it is less than the extent of balances kept with RBI.
- The Fino Payment Banks will not be allowed to lend money to any person, including their directors. However, the Fino Payment Banks can lend to their employees from the bank’s funds, per a Board approved policy outlining the caps on such loans.
- When applying for a license, the Fino Payment Banks should submit a list of financial products they intend to offer with clarity to the RBI. Every new product proposal introduced must be intimated to RBI for information.
- The CRR and SLR requirements and the various disclosures and statutory/regulatory reports applicable to commercial banks will similarly apply to the Fino Payment Banks.
- Constitution and functioning of the board of directors, Constitution and functioning of the board, management level committees,s and remuneration policies applicable to banking companies will be similarly applicable to the Fino Payment Banks.
- The annual plans for opening physical access points by the Fino Payment Bank for the initial five years will require approval from RBI. The first plan must be submitted to RBI before the commencement of business. Post the initial stabilization period of five years, and after reviewing well, RBI may decide upon the requirement of prior approval.
- An employee of the Fino Payment Bank must be available for a sufficient duration at a fixed location to attend to customer grievances and support the agent’s supervision.
- The Fino Payment banks are permitted to include Business Correspondents for operations except for opening savings and current accounts.
- The Fino Payment banks can accept only savings and current deposits up to 1 lakh per customer.
- Fino Payment banks can rely upon electronic authentication instead of wet signatures.
- The Fino Payment banks can exchange mutilated and defective notes, subject to compliance with RBI norms.
- The outsourced operations, internet banking, and mobile banking of the Fino Payment Banks will be similar to commercial banks.
- Fino Payment banks can load PPI balances through other bank credit cards.
What is the growth and future of Fino Payment Bank?
The development of Fino Payment Banks attempts to increase financial inclusion and improve financial penetration in India. Since the focus of these banks is primarily on the low-income groups that any traditional bank does not target, there is enormous scope for growth and a bright future in this sector.
Fino Payment Bank has been a profitable company in the banking sector since the last quarter of FY20. Financial awareness, digitalization, and the internet have also contributed to the success of Fino Payments Bank as it is helping in better ways to create financial awareness and facilitate financial education in rural and semi-urban areas of India.
The Profitable bank, Fino Payment Bank, is aiming for a growth of 30-35% in the current financial year, which will also help boost the economy of India.
