Fino Payments Bank Seeks Small Finance Bank Licence
Why in the news
Fino Payments Bank is preparing to become a Small Finance Bank to raise earnings, begin lending and deepen ties with merchants and account holders. It applied to RBI in November 2024.
Payments bank vs SFB
| Point | Payments bank | Small Finance Bank |
|---|---|---|
| Lending | Not allowed | Allowed (micro-enterprise, housing, vehicle, farm loans) |
| Deposits | 75% kept in government securities | From residents and NRIs |
About SFBs
- RBI-regulated niche banks for financial inclusion of unbanked and underserved people, especially in rural and semi-urban areas.
- Announced in the 2014-15 Union Budget; guidelines in November 2014; first 10 licences in November 2015 (including AU, Equitas, Ujjivan).
- Law: Banking Regulation Act, 1949 and RBI Act, 1934; scheduled status possible.
- 75% of ANBC to priority sectors; minimum capital ₹200 crore; no subsidiaries for non-bank financial activity; 25% of branches in unbanked rural centres.
- Services: savings and current accounts, FDs, RDs, loans; with RBI nod, insurance, mutual funds, pensions and forex distribution.
Exam angle
- Priority sector norm for SFBs: 75% of ANBC.
- Related term: financial inclusion.