After being barred from opening new accounts by the RBI, Fino Payments Bank is looking at alternative streams to make up for revenue loss and also fears a delay in a planned capital raising exercise, a top official said today.
After being barred from opening new accounts by the RBI, Fino Payments Bank is looking at alternative streams to make up for revenue loss and also fears a delay in a planned capital raising exercise, a top official said today. The Reserve Bank of India (RBI) in May had directed the city-based payments bank to halt account opening functions till it modifies its processes to adhere to the regulator’s rules on deposit limit, which mandates payments banks to restrict deposits to Rs 1 lakh.
“The purpose of the bank is to open accounts. There is some losses because of that. But we are trying to do other things to compensate that loss like becoming more active in CMS (cash management services) activities, business correspondent activities and remittances,” its managing director and chief executive Rishi Gupta told reporters here.
He said remittances will grow to Rs 1,700 crore this month and will touch Rs 2,000 crore. Gupta said the bank was opening an average of over one lakh accounts per month, which have been stopped since May because of the RBI action. He said the bank has been penalised by the RBI because balance in some of the accounts had crossed Rs 1 lakh, which is the cap for a payments bank.
Acknowledging that the bank’s systems could not cap the account balances, Gupta claimed the necessary changes to the systems have been done to avoid a repeat. He said receipt of pension money and interest were among the reasons why the account balances had gone up. However, when asked about the timeline for the RBI to revert back to normal operations where it is allowed to open new accounts, he could not answer.
The bank’s Rs 300-crore capital infusion plan through a share sale to either a financial or strategic investor is still on, he said, adding that the impact “from an optics point of view” may result in a delay in the plans. The bank was aiming to complete the transaction by September or October initially.