Fino Payments Bank: Small Finance Bank Transition and SFB Rules
Why in the news
Fino Payments Bank said its conversion into a Small Finance Bank (SFB) is on schedule, though its MD and CEO has been arrested.
Key facts
- RBI gave in-principle approval for the conversion.
- Rishi Gupta, MD and CEO, was arrested over alleged GST violations.
- SFBs promote financial inclusion by serving underserved groups and lending to small businesses, micro enterprises, farmers and the unorganised sector.
- SFBs can take deposits freely and lend widely, which payments banks cannot.
Payments bank vs SFB
| Feature | Payments Bank | Small Finance Bank |
|---|---|---|
| Lending | Not permitted | Permitted |
| Deposits | Demand only, within an RBI cap | Demand and time |
| Minimum capital | ₹100 crore | ₹200 crore |
| Priority sector lending | No mandated target | 60% of ANBC or CEOBE (higher), from FY 2025–26; 40% specified sub-sectors, 20% flexible |
| Income | Fees, remittances, third-party product sales | Loan interest plus fees |
| Customers | Migrants, low-income households, small businesses | MSMEs, small farmers, informal workers, low earners |
ANBC and CEOBE
- The PSL base is the higher of the two.
- ANBC: Adjusted Net Bank Credit, i.e. credit plus non-SLR bond investments after adjustments.
- CEOBE: Credit Equivalent of Off-Balance Sheet Exposures, such as guarantees and letters of credit.
Exam angle
- Capital floors: ₹100 crore vs ₹200 crore.
- Only SFBs may lend.