Fino PB shares tank 12% despite RBI approval FOR transition into SFB

Profit-taking and a broader selloff drive the record fall, even as the bank gets 18 months to transition into a small finance bank with a cautious lending plan

Shares of Fino Payments Bank logged their steepest-ever single-day drop on Monday. Shares tumbled over 12 per cent to close at Rs 275 on the NSE. The record drop came even as the firm secured the Reserve Bank of India’s approval to transition into a small finance bank.

 

While the development is positive for the company, experts said the fall could be on the back of profit-taking following a sharp 15 per cent rally over the past two weeks. Also, the selloff in the broader market could have weighed on the performance. The Nifty Smallcap 100 index on Monday declined 2.6 per cent.

 

Last week, Fino Payments Bank announced that it has received the RBI’s approval to transition into a small finance bank, becoming the first payments bank to do so. The lender had applied for this approval two years ago.

 

The payments bank has received 18 months from the regulator to transition into an SFB.

 

According to Emkay, Fino would remain a payment-dominated bank in the initial years of its transition and gradually build the lending business tied to its existing customer base, to ensure portfolio quality and profitability.

 

“The bank aims to steadily build a lending asset under management (AUM) of Rs 5,000 crore over FY28-30, comprising 65-70 per cent MSME loans and 30-35 per cent loan against property and mortgages, contributing 20-25 per cent of total revenue by the end of three years of SFB operations.

 

“We believe that initially, the loan portfolio will carry a higher blended yield, given the MSME loans, while a strategic shift towards secured lending will lead to some yield moderation, partly offset by a reduction in funding cost,” Emkay said in its report, adding that as an SFB, Fino will need to maintain promoter (Holdco) shareholding of at least 40 per cent for the initial five years, which will need to be reduced to 26 per cent within 15 years, adhering to a 26 per cent cap on individual voting rights.

 

Currently, Fino Paytech holds 75 per cent in the payments bank.

 

In an interview to Business Standard, Rishi Gupta, managing director and chief executive officer, Fino Payments Bank, said they want to adopt a cautious approach to lending. “We will focus on a few geographies and a few points of contact. We will not open lending in every part of the country. This is our plan as of now. On the deposit side, however, we will continue to grow and build,” he said.