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Ashish Ahuja, CBO, Fino Payments Bank

India’s payments bank Fino Payments Bank has topped the targets set by the Ministry of Electronics and Information Technology (MeitY) to push banks towards digitisation. As per the MeitY report, the Mumbai-based payments bank (PB) scored a total of 72 by topping a list of 53 banks, including universal banks, for the financial year 2018-19. Fino, which scored 20 in the previous fiscal, witnessed a 193 per cent growth in digital transactions and 100 per cent achievement for merchant deployment, multinational bank Bank of America scored the lowest at -7. It did not even share its data with the MeitY.

MeitY’s scorecard for banks takes into consideration the various parameters such as digital payments transactions, new merchants acquired in rural markets, BHIM Aadhar PoS deployment, compliance for digitization and grievance handling among several others. Only one universal bank- HDFC Bank, has been rated as good in the MeitY’s report card.

Ashish Ahuja, Chief Business Officer, Fino Payments Bank told IBS Intelligence that, “Transactions are at the core of Fino Payments Bank model that ride on our strong merchant network of over 125,000 points spread across 550 districts. Our phygital approach to reach out to customers and help them transact through IMPS, AePS, NEFT, debit cards and others has paid dividends.”

He further added that at present the payments bank does around USD 1 billion worth of transactions every month and a significant of those are facilitated through digital platforms such as UPI, Aadhaar and IMPS.  “By the end of this fiscal, we plan to increase our merchant network to 2.5 lakh points driven largely by our focus on East and North East geographies. We already have 60,000 micro ATMs in the market with plans to reach 100,000 by the end of March 2020. All our initiatives are aimed at improving our business and in the process increase digital transactions,” he added.

Amongst other payment banks, Paytm Payment Bank came in at a second position with 106 per cent growth in digital transactions while  Airtel Payments Bank grew by 96 per cent. However, in overall scoring for payment banks, Paytm was behind Airtel. Jio payments bank was scored as unsatisfactory with a 59 per cent growth in digital transactions. Both Paytm and Jio did not share their respective data regarding their penetration in rural geography.

Fino’s improved performance comes in at a time when questions are being raised on the viability and business model of payments bank, that was conceptualised by the Reserve Bank of India in 2016 to drive financial inclusion. Payments Bank is a deposit-taking bank with a cap of INR 0.5 million per account. It can offer remittance services, mobile payments or transfers or purchases and other banking services like ATM/debit cards and net banking. However, it cannot lend on its own but can do it through partnerships with banks and NBFCs.

Meanwhile, most of the banks have shown average performance in fulfilling the digital transaction targets set by the Indian government for 2019 fiscal. The performance for most of the banks has deteriorated as compared to last fiscal, wherein the MeitY had assigned a target of INR 250 billion digital payment transactions to about 38 public and private sector banks for financial year 2017-18.

Last only eight private sector banks, including HDFC Bank, Ratnakar Bank, Kotak Mahindra, Bandhan Bank and YES Bank, achieved a ‘good’ rating. Nine banks, including SBI, IDBI and Central Bank of India, have been given an ‘average’ score, while the others have been marked ‘unsatisfactory’.

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by Priyanka Pani
Senior Regional Correspondent, Middle East and Asia
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