**Fino Payments Bank to Focus on Secured Lending Amid Transition**
Fino Payments Bank is set to embark on a cautious transition towards secured lending, emphasizing loans against property (LAP), affordable housing, and, to a lesser extent, gold loans, according to Managing Director and CEO Rishi Gupta. In a recent interview, Gupta highlighted that unsecured lending will be strictly limited and strategically targeted. Following the Reserve Bank of India’s approval, the bank plans to increase its proportion of secured assets relative to unsecured ones, while expressing a lack of interest in the microfinance sector.
Gupta views the small finance bank (SFB) approval as a significant endorsement of Fino’s business model and long-term sustainability. This transition is expected to provide employees with stability, enhance credit access for merchants, offer investors a unique SFB focused on payments, and broaden the range of services available to customers. Within the realm of unsecured lending, Fino intends to concentrate on small business loans for its established merchants, typically ranging from ₹5-10 lakh. Gupta emphasized the importance of pursuing measured growth rather than engaging in reckless lending practices.
With a robust network of merchants and customers, Fino aims to prioritize these groups in its lending strategy. The bank’s merchant network has expanded to 2 million, with 56,000 new merchants added in the quarter ending September. Average deposits surged by 36% year-on-year, reaching ₹2,306 crore during the same period. When discussing the bank’s loan book strategy for the next 12-24 months, Gupta mentioned that they are analyzing specific numbers, selecting targeted geographies, and identifying key areas of focus.
Fino’s small finance bank strategy heavily relies on its extensive distribution network, developed over nearly two decades. The bank’s business correspondent network, crucial for its payments and deposit operations, will be enhanced to generate and partially fulfill lending leads. The transition to a small finance bank will also eliminate the ₹2 lakh cap on savings balances, enabling Fino to offer fixed and recurring deposits. The bank’s existing liability franchise, which currently mobilizes ₹700–800 crore of low-cost deposits annually at around 2% cost, is expected to grow further through its business correspondent network.
As of the September quarter, Fino’s current and savings accounts reached 16 million, with 910,000 new accounts opened, averaging 9,893 accounts per day—a growth of 11% year-on-year. The business correspondent segment, which currently accounts for nearly 70% of revenues, will require partial divestment to comply with small finance bank regulations. Fino anticipates that this transition will enhance its overall liability and lending capabilities.
**FAQ**
*What is Fino Payments Bank’s focus in its lending strategy?*
Fino Payments Bank is focusing on secured lending, particularly loans against property, affordable housing, and small business loans for existing merchants, while limiting unsecured lending.