Fino Payments Bank Gets In-Principle Nod to Become an SFB
Why in the news
RBI has agreed in principle to let Fino Payments Bank become a small finance bank (SFB). It is the first payments bank in India to get such a nod, though the final licence depends on meeting conditions in a set period.
Key facts
- Approval type: in-principle only; Fino is not yet an SFB.
- Time limit: 18 months to complete all requirements before the final licence.
- Eligibility trigger: payments banks need 5 years of operations; Fino’s bank began in 2017.
- Application: filed between October and December 2023.
- Track record: first profitable payments bank (2020); first listed payments bank (2021).
What the switch allows
- Taking deposits without the ₹2 lakh per-customer cap that binds payments banks.
- Lending to individuals, MSMEs and small businesses: microcredit, agri, business and retail loans.
- Branch growth, with 25% of branches required in unbanked rural centres.
| Area | Norm |
|---|---|
| Eligible applicants | Payments banks, NBFCs, MFIs, local area banks and other resident-owned entities; resident professionals with 10 years of senior banking or finance experience |
| Track record | Payments banks: at least 5 years of operations, sound finances and clean compliance |
| Minimum capital | ₹200 crore paid-up voting equity or net worth |
| Promoter stake | At least 40%, locked in 5 years, diluted to 26% within 12 years |
| CRAR | 15% of risk-weighted assets, with Tier I at least 7.5% |
| Foreign holding | Up to 74% overall: up to 49% automatic route, above 49% by approval; residents hold at least 26% |
| Priority sector | Overall target lowered from 75% to 60%; 40% stays for specified sub-sectors; flexible part cut from 35% to 20% |
| Loan size | At least 50% of the portfolio in advances up to ₹25 lakh |
| Exposure cap | 10% (single) and 15% (group) of capital funds |
| Listing | Mandatory within 8 years of starting operations |
Exam angle
- First payments bank cleared for SFB conversion: Fino.
- SFBs get scheduled bank status on commencing operations and follow CRR and SLR.
- Rules sit in the RBI (Small Finance Banks – Licensing) Guidelines, 2025, under on-tap licensing.