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RBI Grants In-Principle Approval to Fino Payments Bank for Conversion into a Small Finance Bank
Fino Payments Bank receiving RBI’s in-principle approval for conversion into a Small Finance Bank:
RBI Approval: The Reserve Bank of India (RBI) has granted in-principle approval to Fino Payments Bank Ltd to convert into a Small Finance Bank (SFB), marking a major regulatory milestone for the company.
First of Its Kind: Fino Payments Bank is the first payments bank in India to receive approval to transition into a Small Finance Bank.
Broader Banking Capabilities: As an SFB, the institution will be able to offer a wider range of banking services, going beyond the limited functions permitted under its current payments bank licence.
History and Application: Fino Payments Bank began operations in 2017 and had applied for the SFB licence during October–December 2023 under the RBI’s “on-tap” licensing framework.
Board Approval: The bank’s board had approved the transition proposal in July 2023 before submitting the application to the RBI.
Future Product Plans: After conversion, Fino plans to introduce new lending products, including small personal loans (below ₹50,000) and secured lending for micro, small, and medium enterprises (MSMEs).
Regulatory Requirements: To be eligible for conversion, payments banks must have completed five years of operations and meet minimum capital or net worth thresholds set by the RBI.
Profit Target: Fino Payments Bank aims to achieve a profit after tax of ₹100 crore in the current financial year, a target linked to its expanded business scope post-conversion.
Merchant Network: The bank continues to expand its merchant base, adding around 150,000–200,000 merchants annually, with a network of approximately 19 lakh merchants.
Collaborations for Lending: On the lending side, Fino is partnering with non-banking financial companies (NBFCs) to offer products such as gold loans, microloans, and affordable housing finance.
Business Model: As a technology-led, asset-light digital bank, Fino focuses on financial inclusion, processing over ₹1.1 lakh crore in transactions in the second quarter of FY26, with more than half of transactions digital.
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