RBI grants in-principle approval to Fino Payments Bank for conversion into a small finance bank

Fino Payments Bank’s net income rose 26 per cent to ₹118 crore

The RBI had issued guidelines for ‘on tap’ licensing for SFBs in the private sector. As per the norms, existing payment banks, which are controlled by residents and have been operating for five years, are eligible for conversion to SFBs. The application of FPBL has been assessed according to the procedure laid down in the guidelines, the regulator said.

Earlier this year, the RBI granted in-principle approval to AU SFB to be converted into a universal bank and returned Jana SFB’s application to be converted into a universal bank. Ujjivan SFB had also applied for a universal banking license and its application is being processed by the regulator.

With the departure of Fino, there are few operational and large-scale payment banks left in the country. These include Airtel Payments Bank, Jio Payments Bank and India Post Payments Bank. Paytm Payments Bank was barred by the RBI from accepting new deposits and undertaking new operations for material violation of regulatory norms. The ban, imposed in 2018, remains in place to this day.

The payments banking model emerged primarily to help underserved populations in the hinterland conduct transactions. However, with digital transactions on the rise and RBI rules saying banks cannot lend money and accept more than ₹2 lakh from each depositor, experts say the model is no longer sustainable.

“When the idea was conceived, it was clear that these entities would make money from payments and transfers. That is the reason they were allowed to accept only ₹1 lakh as deposit from each customer, the limit of which was later increased to ₹2 lakh. But after that model was introduced, demonetisation came into effect, UPI transactions improved and digital transactions increased as per government guidelines,” former RBI deputy governor R Gandhi told us. business line in a previous interaction.

“So the revenue model for the payment bank is flawed now, there is no money there, so how will they succeed. Payment banks cannot sustain in their current state. They should be given the opportunity to be converted into an SFB,” he added.

“This approval provides an opportunity for Fino to realize its growth potential by expanding product offerings, addressing a broader customer segment, committing to lending and building a strong liability franchise, thereby creating significant value for all stakeholders,” said Rishi Gupta, MD and CEO of Fino Payments Bank.

Fino will continue to leverage its asset-light, distribution-driven network while investing in technology, data and partnerships to build scale.

Published on December 5, 2025