The Reserve Bank of India (RBI) has granted in-principle approval for Fino Payments Bank to transition into a Small Finance Bank (SFB).
Following this announcement, the move is expected to allow Fino to offer lending services, which are currently restricted under its payments bank licence, as the final approval is still awaited.
In addition, Fino’s shift to a small finance bank is expected to broaden its overall financial services offering, while also giving the company the possibility to expand into loans while continuing its payments and deposit services as well.
Converting into a Small Finance Bank and optimising customer experience
According to the official statement, the approval is expected to provide Fino an opportunity to realise its growth potential through the process of expanding its product suite, engaging with a wider customer segment, foraying into lending, and building a strong liability franchise. At the same time, this initiative will also enable the firm to develop significant value for all stakeholders.
Moreover, the in-principle approval, combined with its optimised operating income, could give Fino a platform to scale lending operations, while also complementing its existing payments infrastructure. The institution will continue to focus on meeting the needs, preferences, and demands of clients and users in an ever-evolving market, while prioritising the process of remaining compliant with the regulatory requirements and laws of the industry as well.
RBI has issued the Guidelines for ‘on tap’ licensing of SFBs in the private sector, and, per the guidelines, existing Payments Banks that are controlled by residents and have completed five years of operations are set to be eligible for conversion into SFBs. Furthermore, the application of FPBL was assessed as per the procedure laid down in the guidelines provided by the institution.
Fino Payments Bank received RBI approval for international remittance business in 2022, and was expected to be undertaking inward cross-border money transfer activities, while partnering with an overseas principal. Furthermore, it also received the approval to partner with a global remittance service provider as its overseas principal.
