Fino Payments Banks Ltd – IPO(Only High-risk investors may Subscribe)

Financial Inclusion Network Operations (FINO) started as a technology company aimed at developing technological solutions and services related to financial inclusions. In 2015, Fino PayTech Limited was granted in-principle approval to set up a payments bank and today their products and services are widespread including various current accounts and savings accounts (CASA), open banking functionality (via Application Programming Interface “API”). The company’s merchants facilitate them in cross-selling their other financial products and services such as third-party gold loans, insurance, bill payments and recharges. Fino Payments also manages a large BC (Business Correspondents) network on behalf of other banks. As of 2021, they have 641,892 merchants spread across 94% of districts in India making them the 3rd largest bank for facilitating digital transactions in India. Their unique framework of distribution, technology and partnership (“DTP” framework) enables them to serve their target market efficiently and is used to overcome and/ or achieve improvements on three key challenges associated with serving their target market, being scale, service and sustainability

Fino Bank operates an asset-light business model that is underpinned by their “phygital” delivery model (i.e., a combination of physical and digital) and relies on their merchant network and other participants. Bank’s products and services include various Current Accounts and Savings Accounts issuance of debit card and related transactions, facilitating domestic remittances, open banking functionality via their API, withdrawing and depositing cash (via micro-ATM or Aadhaar Enabled Payment System “AePS”) and Cash Management Services (“CMS”).

Fino Bank is also the only payments bank to offer a subscription-based savings account in India. Customer satisfaction, brand and reputation have played an important role in them becoming an industry leader in fintech products and services.

As of June 30, 2021, Fino Banks has built a pan-India presence with 724,671 merchants (own and API) which are typically located in Tier-2 and Tier-3 towns. They currently have approximately 17,430 active BCs across India. Additionally, they operate 54 branches and 130 Customer Service Points. Fino Bank is currently a wholly-owned subsidiary of Fino Paytech Ltd, whose principal shareholders include marquee investors such as ICICI Bank Ltd, Intel Capital Corporation, International Finance Corporation, HAV3 Holdings (Mauritius) Ltd, Blackstone GPV Capital Partners (Mauritius) VI-B FDI Ltd and Bharat Petroleum Corporation Ltd.

On the financial performance front, Fino Payments Bank has posted a total income/net profit (loss) of Rs 3.71 bn/ Rs – 0.62 bn. For Q1FY22, it has earned a net profit of Rs 31.3 mn on a total income of Rs 2.06 bn. However, as of June 30, 2021, it has carried forward a loss of Rs 3 bn. Based on these figures, the issue is highly priced. Thus, only high-risk investors may Subscribe.

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