Fino Payments Bank Eyes Transition to Small Finance Bank, Aims for RBI License in H2FY24

Fino Payments

Fino Payments Bank, a prominent player in the financial services sector, is gearing up for a significant transformation. The bank’s board recently granted approval for the transition to a small finance bank (SFB) model, marking a pivotal moment in its strategic direction. Fino Payments Bank’s Chief Financial Officer (CFO), Ketan Merchant, shared insights into this transformative journey and revealed the bank’s plan to apply for an SFB license from the Reserve Bank of India (RBI) in the second half of the fiscal year 2023-24 (H2FY24).

As Fino Payments Bank sets its sights on becoming a small finance bank, a key aspect of its plan is to secure the necessary regulatory approval from the RBI. CFO Ketan Merchant explained that the bank’s next step involves submitting an application to the regulator. He outlined that while this process might take approximately 24 months before full operations commence, the bank is actively engaged in progressing its SFB aspirations and aims to initiate the regulatory dialogue during this fiscal year.

Fino Payments Bank’s transition to an SFB model holds significant implications for its growth trajectory. Notably, it is the pioneer among payments banks in making this transition, signaling a strategic move that aligns with evolving market dynamics. According to the regulatory guidelines set by the RBI, payments banks that have maintained operational status for a minimum of five years are eligible to seek an SFB license.

CFO Ketan Merchant emphasized that the bank’s six years of successful operations within the payments bank landscape have equipped it with valuable insights and experience. The transition to an SFB not only unlocks opportunities for Fino Payments Bank to continue its existing services but also expands its horizons to include new dimensions of financial operations.

One of the most significant advantages of this transition is the ability to accept deposits beyond the threshold of Rs 200,000, which was previously constrained under the payments bank model. This newfound capability allows the bank to cater to a broader range of customers and their financial needs. Moreover, the SFB model grants Fino Payments Bank access to the lending space, enabling it to provide a wider array of financial solutions to its customer base.

Fino Payments Bank’s Current Account and Savings Account (CASA) base stands at approximately 8.3 million currently. With ambitious growth projections, the bank aims to elevate this number to a staggering 200 million within the next three years. This target reflects the bank’s dedication to expanding its customer base and increasing its market presence.

The move to transition to an SFB model is in line with Fino Payments Bank’s commitment to enhancing its service offerings and fostering financial inclusion. By embracing the small finance bank structure, the bank not only empowers itself with new avenues for growth but also positions itself to play a more comprehensive role in India’s evolving financial landscape.

The financial sector, particularly banking, is undergoing rapid transformations driven by technological advancements, changing consumer preferences, and regulatory dynamics. Fino Payments Bank’s strategic decision to become a small finance bank reflects its proactive approach to staying ahead of these changes. As the bank prepares to navigate the regulatory processes and operational transitions, market observers are keenly watching how Fino’s strategic move will shape its trajectory and contribute to the broader financial ecosystem.

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