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Business correspondents company Fino, which launched its payments bank today, is looking to raise up to Rs 200 crore in core capital over the next few months and a listing in about four years, a top official said.
"We had a requirement of around Rs 600 crore but raised only Rs 400 crore in capital in the last round. We will be raising Rs 150-200 crore in the next few months," Fino's managing director and chief executive Rishi Gupta said today.
Gupta said the money is required for expansion and the payments bank will prefer to raise it from a strategic investor rather than a financial investor.
It already counts on ICICI Bank and state-run oil marketing company BPCL as its strategic investors who own 20 per cent each in the payments bank.
Asked if the bank will be interested to partner with a telecom player, given the distribution reach, Gupta declined a straight answer but said the telecom sector is going through its own difficulties now.
He said it will be a new shareholder and not among the existing investors because of concerns on breaching the foreign holding caps. It had raised Rs 400 crore from BPCL, and ICICI Bank's life and general insurance arms earlier.
Under the norms, the bank has to list itself once its net worth crosses Rs 500 crore, Gupta said, adding that the bank will have to go for an initial public offering (IPO) in two-and-a-half to four years, once it turns profitable.
"We will start thinking about an IPO in 2019 and do the fund raising later. We will do the IPO before we complete four years of operations," he said.
Gupta said the company, founded in 2006, which clocked a turnover of Rs 350 crore in FY17, has incurred huge expenses in the run up to becoming a payments bank by way of network expansion, and staff expansion to 4,000 from 2,500.
At present, it is operational in 14 states through 410 branches and 50,000 distribution points, which include 25,000 business correspondent outlets, 5,000 retail outlets of BPCL and 20,000 of its own smaller outlets, he said.
It is targeting to increase the same to one lakh over the next three-five years, by which time it is targeting a deposit base of Rs 10,000 crore, Gupta said.
Unlike the aggressive posturing by competition, like Airtel's over seven per cent interest rate on saving accounts, Fino will be sticking to the four per cent interest, Gupta said, clarifying that rather than rates it will concentrate on better service.
The share in revenue from acting as business correspondent to commercial banks will grow but come down to 20 per cent of the pie in the next three-five years, he said, adding that the rest will come from investments of deposits in G-secs, remittance fees, lending tie-ups and insurance cross selling.
The payments bank already has tie-ups with three lenders to sell their loan products and is also looking to seal two more partnerships soon, he said, adding it has tied up in all categories.
At the launch event, ICICI Bank chief Chanda Kochhar said financial inclusion is not about opening savings bank accounts alone, but creating access to extend services like savings and insurance.
She said Fino has its genesis in an internal financial inclusion project started by ICICI Bank to use biometrics for serving the public, which was later carved out as a separate company in 2006.