About the Company

Financial Inclusion Network Operations (“FINO”) – full form

Fino Payments bank provides banking services predominantly in rural areas.

It has a differentiated model when compared to other Payment banks

Business Model

Branch light, merchant heavy model – an asset-light business model that principally relies on fee and commission-based income generated from their merchant network and strategic commercial relationships. Each merchant serves the banking and financial needs of its community, which in

turn forms the backbone of our assisted-digital ecosystem, referred to as our “phygital” delivery model (i.e., a combination of physical and digital).

very low fixed costs, most of the costs are variable in nature – The merchant’s use of technology and their use of analytics on the data that they capture enhances the merchant’s ability to cross-sell the third-party products that they also offer, to existing customers, thereby increasing potential revenue

and opportunity to further customize products and services offering.

Such a merchant-led distribution model requires minimal capital expenditure cost because the on-boarding and setup capital expenditure costs are borne by the merchant, and accordingly, allow for operating leverage and efficient expansion in a timely manner. Through the “phygital” delivery model

Merchants onboard customers and facilitate transactions, ensuring the network grows and products and services are more accessible to a broader range of customers throughout India, giving Fino what they believe to be is a significant advantage compared to competitors.

fee driven model-remittances followed by a micro atm and business correspondent banking

-massive scope to grow

Products and Services

current accounts and savings accounts (“CASA”), issuance of debit card and related transactions, facilitating domestic remittances, open banking functionality (via our Application Programming Interface (“API”)), withdrawing and depositing cash (via micro-ATM or Aadhaar Enabled Payment System “AePS”) and cash management services (“CMS”).

Their merchants also leverage the customer relationships within their respective communities to facilitate cross-selling other financial products and services such as third-party gold loans, insurance, bill payments and recharges. Fino also manages a large BC network on behalf of other banks.

The primary drivers of our revenue are the fees and commissions that we charge for our products and services, and the volume achieved from such fees and commissions

For the three months ended June 30, 2021, and the financial years 2021, 2020, and 2019, our total fees and commissions combined accounted for 97%, 98%, 97%, and 95% of our total income, respectively

This is how it works –

They manage approximately 17,430 active BCs across India as of June 30, 2021, who are generally retail agents engaged by us to provide banking products and services on behalf of other banks (such as Union Bank of India and Canara Bank) and at locations other than at traditional branches.

Zero operational risk – A merchant does all transactions, but he has to deposit money before that. If Rs 50k is deposited, the system will only allow a limit of 50k, no limit beyond that, 47000 limit comes, then only limit will be enhanced

Issue Details

Objects of Issue


The promoter is Fino PayTech Limited. Fino pay tech holds 100% of Fino payments bank

Fino PayTech Limited was granted in-principle approval to set up a Payments Bank on September 7, 2015, and was granted a license by the RBI to set up a Payments Bank on March 30, 2017.

Fino Paytech’s principal shareholders include marquee investors such as ICICI Bank Limited, Intel Capital Corporation, International Finance Corporation, HAV3 Holdings (Mauritius) Limited, Blackstone GPV Capital Partners (Mauritius) VI-B FDI Limited, and Bharat Petroleum Corporation LimitedObjects of Issue


A large number of our merchants are located in the states of Uttar Pradesh, Bihar, and Madhya Pradesh. As of June 30, 2021, aggregated to 46% of own merchants and aggregating to 43% (for the three months ended June 30, 2021: 47%) of total revenue from operations.

The banking and financing sector in India is highly competitive and they face competition across all of products and services from other payments banks, certain fintech companies, microfinance institutions (“MFIs”), small finance banks (“SFBs”), as well as from scheduled commercial banks, public sector banks, private sector banks, non-banking financial companies (“NBFCs”) and foreign banks with branches in the country.

They compete closely with other BC operators in our domestic remittance, micro-ATM, and AePS offerings; with regional rural banks, public sector banks, and small finance banks on our CASA accounts; with BC operators and dedicated CMS entities on our CMS; and with insurance companies, brokers, corporate agents on third party insurance sales and online aggregators

Business Landscape

Peer Comparison

Out of 6 total, 3 payment banks are profitable right now – Indian Post Payments Bank, Jio Payments Bank, and Fino Payments Bank

Key Performance Indicators


Note – NPAs not applicable here or not a valid metric as Payment banks can’t lend.

Valuation & Conclusion

Q1FY22 NAV – 34.5 Rs

FY21 EPS – 2.62

Q1FY22 EPS – 0.40

Fino payments bank is more a fintech platform rather than a payments bank. Using variable cost models and merchant-led asset-light growth, they have been able to scale up very fast.

At the upper band of Rs 577, the bank is valued at 16.7x Price to book value.

On the other hand, price to revenue multiple can be used to value as The model of Fino has been built in such a way that after a certain scale in operations, costs will not exponentially.

An example of this was demonstrated in FY21 where the total revenue grew by Rs. 100cr from Rs. 691cr in FY20 to Rs. 791cr in FY21. But total PAT grew by Rs. 52.5cr from a loss of Rs. 32cr in FY20 to a profit of Rs. 20.5cr in FY21. This is primarily due to the operating leverage which is embedded in the model wherein after a certain scale, the cost growth stabilizes while revenue grows due to the network.

However, such a model may have scalability challenges as well as the thread of being copied very easily. We would like to wait and watch how the company evolves.

About Industry

In 2015, the RBI laid down the framework for payments banks with the objective of widening the spread of payment services and deposit products to small businesses, low-income households, migrant labor workers, and other unorganized entities by enabling high-volume low-value transactions. Our target addressable market according to CRISIL as of March 31, 2021, is approximately ₹0.85 trillion by potential revenue.

The Indian banking system currently consists of 12 public sector banks, down from 26 owing to the merger of some public sector units to make them more relevant, 22 private sector banks, 46 foreign banks, 43 regional rural banks, 11 SFBs, six payment banks, 2,550 cooperative banks. All the banks fall under the purview of the RBI.

Comparison of different business models

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