Fino Payments Bank becomes first to secure RBI nod for small finance bank conversion

Fino Payments Bank has received in-principle approval from the Reserve Bank of India (RBI) to convert its operations into a Small Finance Bank (SFB), becoming the first payments bank to achieve this milestone. This marks a significant shift for the company, allowing it to expand its offerings by providing loans, a move that was previously not permitted under the payments bank model.

Fino, which is currently the only publicly listed payments bank in India, will now be able to offer a range of financial services beyond its existing business model. While traditional payments banks, including competitors like Airtel Payments Bank, India Post Payments Bank, and Jio Payments Bank, are limited to investing deposits in government securities or bonds, Fino will be allowed to offer on-balance sheet lending, a key benefit of its conversion.

In addition to its core offerings, Fino has already ventured into third-party lending by providing gold loans, housing loans, and loans against property as part of a referral business model. These verticals are expected to form the foundation for its new lending business once the conversion is complete.

In its latest financial results, Fino Payments Bank reported a net profit of ₹15.4 crore for the second quarter, down from ₹21.2 crore in the same period last year. The decline was attributed to a slowdown in its digital business, which has been a key revenue driver.

The approval from the RBI comes under the guidelines for the conversion of payments banks into small finance banks, which were issued in 2025. Payments banks controlled by residents and having completed at least five years of operations are eligible for this transition. Notably, corporates like Airtel and Jio, which own payments banks, are not eligible under the current framework.

Fino’s journey began in 2006 as a payments technology company and has played a pivotal role in India's financial inclusion initiatives. It has been actively involved in providing direct benefit transfer (DBT) services to beneficiaries under government schemes. The company made history in 2020 by becoming the first profitable payments bank and further solidified its position in the financial sector by getting listed on the stock exchanges in 2021.

With this approval, Fino is poised to redefine its business model and strengthen its role in India’s evolving banking landscape. As the first to take this step, Fino is setting the pace for other payments banks, signaling a shift toward more comprehensive banking services in the Indian financial ecosystem.