Fino becomes first payments bank to get RBI's nod to convert into SFB

Fino Payments Bank (Fino) has become the first such entity to get an in-principle approval from the Reserve Bank of India (RBI) to transition into a small finance bank (SFB).

 

The transition will allow Fino to accept larger deposits, provide loans and credit facilities to individuals and small businesses, and expand its customer base and services, which are currently restricted for payments banks.

 

The in-principle approval comes nearly two years after Fino applied for a licence to become an SFB. Fino had applied for the licence under the RBI’s guidelines for “on tap” licensing of private sector SFBs.

 

A payments bank is eligible to apply to transition into an SFB after completing five years of operations, subject to meeting compliance and regulatory requirements. Fino began operations as a payments bank in 2017.

 

“The RBI has issued guidelines for ‘on tap’ licensing of SFBs in the private sector. As per the guidelines, existing payments banks that are controlled by residents and have completed five years of operations are eligible for conversion into SFBs. The application of Fino was assessed as per the procedure laid down in the guidelines,” the banking regulator said.

 

An SFB is required to open at least 25 per cent of its branches in unbanked rural centres.

 

“The approval is a testament to our consistent performance, ability to take technology-led banking to the masses, promote digital payments and adherence to compliance and regulatory guidelines,” said Rishi Gupta, managing director and chief executive officer (MD&CEO), Fino Payments Bank.

 

Fino may explore starting its lending business within one year of receiving the in-principle approval from the RBI.

 

“We are quite hopeful of starting the lending business within one year of the in-principle approval,” Gupta had said during the firm’s Q1FY26 earnings call. 

 

In the run-up to the approval, the company had stated that it was strengthening its systems, people, and processes to be operationally ready to be an SFB.

 

Fino has serves over 16 million customers through more than two million merchants. The firm claims to cover 97 per cent of the country’s pincodes. 

 

As of September 2025, it had a deposit base of over Rs 2,300 crores. 

 

Fino will join a list of 11 other SFBs — AU SFB, Equitas SFB, Suryoday SFB, Utkarsh SFB, Jana SFB, Unity SFB, Capital SFB, ESAF SFB, Ujjivan SFB, Shivalik SFB, and Slice SFB. AU SFB has, in the meantime, received RBI’s approval to transition into a universal bank.

 

Other payments banks in India include Airtel Payments Bank, Jio Payments Bank, Paytm Payments Bank, NSDL Payments Bank, and India Post Payments Bank.