Fino Payments Banks aims Rs 2000 crore gold loan sourcing business for partners riding on rural revival in FY21
28 Jul 2020
Fino Payments Bank aims to double the value of its gold loan sourcing business in FY21. As payments banks cannot lend, Fino is taking the partnership route with banks and NBFCs to source gold loans on their behalf.
In this context, Fino is in talks with a few leading NBFCs to unlock the gold loan potential by leveraging its extensive retail network. Gold loan helps monetize the precious metal by making cash available to rural households and MSMEs impacted by the pandemic for re-starting their lives and businesses.
Fino, which turned profitable last fiscal, has already facilitated gold loan sourcing worth Rs 1000 crores in FY20 as a corporate business correspondent (BC) for a leading bank. More than 30,000 customers availed the service with the average ticket size ranging from Rs 50,000 to over Rs 5 lakhs. In line with RBI guidelines, Fino Payments Bank also acts as a corporate BC for other banks with a dedicated channel, which runs parallel to its retail network.
According to a KPMG report, India’s gold loan market is expected to reach Rs. 4.6 lakh crore by 2022 with rural areas accounting for more than 66% of the total demand. Of the estimated 24000 tonnes of gold possessed by Indian households 60% is in rural areas. Organized sector comprising banks and NBFCs contributes to only 35%, while unorganized players take a big chunk of the gold loan market.
Amit Jain, Head (Alliances & PMO), Fino Payments Bank said, “For banks and NBFCs it is an opportunity to tap the large market serviced by unorganized players. We would be keen to associate with like-minded partners to bring their gold loan offerings closer to rural masses and help them avoid the trappings of the informal sector. We expect the demand to grow in FY21 as people turn to gold loans for their personal and working capital requirements. We aim to do over Rs 2000 crores of gold loan referral business this fiscal.”
Going forward, the bank’s retail network of over 2.25 lakh points comprising of branches and merchants will also facilitate gold loan referral along with offering a range of banking services. The network also includes more than 8000 outlets of the bank’s strategic partner Bharat Petroleum (BPCL).
“With around 80% of our network present in rural areas Fino presents a great distribution platform for entities planning to do business in rural India. Our network already helps partner offerings such as health, life and vehicle insurance reach the interiors of the country. Partnerships are a win-win for all as referrals and cross selling generates revenue while customers getting value and convenience,” added Mr. Jain.
Fino through its network provides savings accounts, instant debit cards, deposit and withdrawals, domestic remittance, insurance, bill payments and mobile / DTH recharge services. Recently, the bank introduced Bhavishya Savings Account, a first of its kind subscription-based account for minors.
How does a gold loan referral work?
As a partner of banks and NBFCs, Fino Payments Bank through its network connects with people who are in need of funds. Anyone, individual or small business owner, who owns gold and can keep it as collateral is eligible to apply for a gold loan. Fino shares leads of such customers with partners, whose representative will complete the rest of the process with the customer, including documentation, approval, disbursal and loan recovery. Fino acts as a facilitator between gold loan issuing bank/NBFC and the customer.
About Fino Payments Bank Limited:
Fino Payments Bank (FPB) is the only entity in its space that has experience in providing technology enabled banking services in unbanked and under banked areas. Promoted by Fino Paytech Ltd, FPB’s ‘phygital’ approach is backed by strong Distribution, Technology and Partnership strategy that makes banking simple, convenient and paperless. It has a nationwide digitally enabled distribution network of over 450,000 banking points spread across 550 districts. This includes a significant number of outlets of Fino’s strategic partner Bharat Petroleum (BPCL) and API partner network.
FPB provides banking services to its target customers using technology platforms such as Aadhaar-enabled Payment System (AePS), mPOS devices, Micro ATMs, tablet or mobile. On the digital front, FPB offers mobile banking app BPay, online account opening, Netbanking and UPI. www.finobank.com
