Fino Payments Bank Secures RBI Approval for Small Finance Bank Conversion

The Reserve Bank of India has approved Fino Payments Bank's application to transform into a small finance bank, creating a milestone as the country's first payments bank to successfully navigate this transition.  

The approval enables the lender to expand its service portfolio beyond the restricted framework of a payments bank, opening pathways for comprehensive lending and deposit operations. 

Application Timeline and Strategic Expansion 

Fino Payments Bank submitted its application for the small finance bank licence between October and December 2023 under the Reserve Bank of India's 'on tap' licensing framework, with the central bank publishing acknowledgement in January 2024.  

The institution, which commenced operations in 2017, received board-level clearance for the strategic pivot in July 2023. This conversion requires maintaining a minimum paid-up equity capital or net worth of ₹200 crore alongside completing 5 years of operational experience.  

The transition permits the introduction of three lending verticals: unsecured individual credit facilities capped at ₹50,000, secured financing for micro, small and medium enterprises, and collaborative offerings with non-banking finance companies encompassing gold loans, microfinance and affordable housing.  

Operational Scale and Investor Backing 

The institution operates an extensive merchant ecosystem spanning 19 lakh touch points, consistently augmenting this network by 1.5 to 2 lakh merchants annually.  

Backed by prominent institutional investors including ICICI Group, Bharat Petroleum Corporation Limited, Blackstone, Life Insurance Corporation and International Finance Corporation, Fino employs a technology-driven, asset-light operational model focused on delivering financial services to underserved populations.  

As a subsidiary of Fino Paytech Ltd., the bank positions itself as a technology-led digital platform serving emerging India through its high-volume, low-cost operational framework centred on financial inclusion. 

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Conclusion 

This development positions Fino to broaden its revenue streams whilst maintaining its financial inclusion mandate, potentially establishing a blueprint for other payments banks contemplating similar transitions. 

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