Fino, which was among the initial entities to get a Payments Bank license in India, has “commenced operations” on the 30th of June 2017, the Reserve Bank of India said in a statement. The Reserve Bank has issued a licence to the bank under Section 22 (1) of the Banking Regulation Act, 1949 to carry on the business of payments bank in India. In response to a query from MediaNama, a FINO (PR) representative said that “Right now, it’s an internal system that has been launched, and they’re in the process of streamlining operations”, and “They’ve received a certificate of commencement from the RBI.” Note that Fino had received a final license from the RBI for the launch in March.

We had inquired because no details of the launch were available, even though the RBI had said that the company has commenced operations. Once it launches, Fino will become the fourth Payments Bank to launch in the country, after Airtel, India Post and Paytm/Vijay Shekhar Sharma. Others with licenses,

Bharat Petroleum (BPCL) owns 21% stake in Fino, which it picked up for Rs 251 crore. Other investors include ICICI Prudential Life Insurance and ICICI Lombard General Insurance, as well as Intel Capital, The Blackstone Group, ICICI Bank, the IFC and HAV3 Holdings. As of December 2016, Blackstone Group held about 20% while Intel Capital and IFC held 15% each in the company.

What we know of Fino’s plans

Fino’s business is largely to focus on facilitating digital payments, which is something that traditional banks have largely failed to do over the past decade or so. In an interview with MediaNama a few months ago, Rishi Gupta, CEO of Fino Paytech, had said that they would be looking at four sources of revenue for the business: “One is the balances in the accounts [Treasury income]. Second is the remittance business. The third revenue stream will be coming in from the Banking Correspondents and lending business. The fourth is the insurance cross-sell and other cross sales.” More from that interview here.

While we wait for Fino to formally launch operations and disclose plans, here’s what we have based on that interview:

  • Accounts: both savings and current accounts
  • Focus: Will be a mix of both digital and physical channels. Fino is a business correspondent, with around 30,000-35,000 business correspondents, and doesn’t want to limit users to digital only.
  • Interest Rates: around 4%
  • Branches: plan to set up 400 branches in rural areas, and to 30 cities. Target is to have 500 branches and 50,000 access points by 2018 end
  • Digital offerings: Aadhaar Pay, eKYC, UPI

Fino also intends to create a digital banking and payments ecosystem around BPCL (Bharat Petroleum), and signed an MoU recently to allow people to remit money, deposit and withdraw cash, make payments for utility bills, recharging mobiles, and pay insurance premiums via BPCL outlets. Initially, the services will be available at BPCL outlets in six states – Uttar Pradesh, Madhya Pradesh, Bihar, Rajasthan, Tamil Nadu and Maharashtra.

Fino will also be deploying 5,000 Aadhaar-enabled micro ATMs across villages in Haryana, Madhya Pradesh, Bihar, Gujarat and Maharashtra as part of National Bank for Agriculture and Rural Development’s (NABARD) push for rural banking. It will provide these micro ATMs to district central cooperative banks and Primary Agricultural Credit Societies (PACS); Haryana State Cooperative Apex Bank (HARCO) will deploy Aadhaar enabled micro ATMs across 600 branches of the 20 district cooperative central banks in Haryana.

More when we have more info.

What Payments Banks can and cannot do

Payments Banks are banks whose operations are significantly limited, as compared to traditional banks, and cannot lend money, take NRI deposits, issue credit cards or set up non-banking-financial businesses:

Additional reading