The Reserve Bank of India (RBI) has given Fino Payments Bank permission (called “in-principle approval”) to start the process of becoming a Small Finance Bank (SFB). This makes Fino the first payments bank in India to get such approval.
As of today, Fino serves over 16 million customers and works with more than 2 million merchants across India. The bank has a wide-reaching presence, operating in 97% of the country’s pincodes. As of September 2025, Fino had total deposits amounting to ₹2,300 crore, reflecting its significant growth and reach in the financial sector.
What Makes Fino Eligible?
RBI rules say that a payments bank may apply to become an SFB if:
1. Minimum 5 Years of Operations
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A Payments Bank (PB) must operate for at least five years before applying to become a Small Finance Bank (SFB).
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This period allows the RBI to assess the bank’s:
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Stability – how well the bank manages its operations over time.
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Governance quality – effectiveness of its leadership and decision-making.
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Security of customer funds – safety and reliability of deposits.
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Compliance with regulations – adherence to banking laws and RBI guidelines.
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Ensures the bank has a proven track record before expanding services.
2. Must meet compliance and regulatory requirements
Even after 5 years, the PB is not automatically converted. It must apply and then prove that it meets RBI’s additional criteria for becoming an SFB, such as:
a. Capital requirements
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Must have minimum paid-up capital (higher than what is needed for a Payments Bank).
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Must maintain proper risk management systems.
b. Governance standards
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Fit and proper promoters
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Strong board and management
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Clean compliance history
c. Financial soundness
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No major regulatory violations
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Good asset quality (once it becomes eligible to give loans as an SFB)
d. Business plan suitability
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Must show a strong and credible plan for serving underserved and small borrowers (the main purpose of SFBs).
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Why is this important for Fino?
As a payments bank, Fino is currently not allowed to give loans. As a small finance bank, it will be allowed to lend money and offer more financial products.
Currently, payments banks like Fino can accept only small deposits of up to ₹2 lakh per customer and offer basic banking services, but they are not allowed to provide loans. Once Fino becomes a Small Finance Bank (SFB), it will be able to accept larger deposits, provide loans and credit to individuals and small businesses, offer a wider range of financial services, and serve a broader customer base.
Fino started in 2017, so it has completed more than 5 years. It applied for the licence two years ago, and after review, RBI has now given the approval. Fino’s MD & CEO, Rishi Gupta, stated that the bank aims to start lending within one year of receiving the approval. In the meantime, it plans to prepare its technology, systems, and staff to smoothly transition into Small Finance Bank operations.
There are already 11 small finance banks in India, such as AU, Equitas, Ujjivan, Jana, and others. Fino will become the 12th.