Fino Payments Bank, which has applied to the Reserve Bank of India (RBI) for a small finance bank (SFB) licence in the third quarter of the current fiscal, will expand its top leadership team and add mid-to-senior level employees to focus more on growing its deposit base and cross-sell products, CFO Ketan Merchant told FE.
“We are investing into building a leadership team. We are intending to have a dedicated team to enhance liabilities,” he said. “Currently, our acquisition team manages deposit mobilisation. So, we are creating scenarios where we will have dedicated assignment, roles and responsibility for liability generation. We are also thinking of creating a cross-sale base.” As on December 31, Fino’s total employee base stood at 2,809.
The payment’s bank’s average deposits grew 42% year-on-year (YoY) to Rs 1,358 crore as of December-end. Deposits are likely to grow at a faster pace from hereon and that will help the entity after its conversion to an SFB. According to Merchant, while there is no precedent of a payments bank converting into an SFB, the regulator may take 18-24 months to assess the payments bank’s proposal and accordingly give its final approval or any other observation.
In case the RBI approves the proposal, Fino Payments Bank will focus on offering credit to its existing merchant base and customers. It aims to grow its merchant base from 1.69 million an on December 31, 2023, to 1.87 million by FY25 and 2.62 million by FY28. It’s customer base, meanwhile, will rise by 2.5 lakh every month. In the December ending quarter the bank added 7.8 lakh customers with the total CASA base crossing 1 crore.
“As a first step, we will focus on merchants’ credit needs because their data have been with us for last three-five years and will grow our MSME (micro, small and medium enterprises) book,” he said. Fino, eventually, intends to enter the retail consumer loan segment and secured products over a period of time. MSME loans would contribute 65%-70% of the overall book.
However, payments will continue to be the mainstay of the entity, as net interest income will contribute only 25% towards the total income, while non-funded income will comprise the 75% share upon conversion to an SFB. The cost of funds of the proposed SFB will be at 3.5%, while the loan yield to MSMEs will be around 15%.
Merchant said Fino Payments Bank will aim to grow its revenue by 20%. In Q3FY24, revenue rose 18% YoY to Rs 370.2 crore, whereas overall throughput value jumped 42% to Rs 93,323 crore.