Fino Payments Bank is actively preparing to transition into a Small Finance Bank (SFB), anticipating approval from the Reserve Bank of India (RBI). This strategic move aims to enable Fino to offer lending services, particularly focusing on secured loans, and to expand its product offerings.

Currently, as a payments bank, Fino is restricted from lending and can only park 75% of its deposits in government securities. This limitation has prompted the bank to seek an SFB license, which would allow it to deepen engagement with partner merchants and account holders, especially in the evolving payments landscape dominated by UPI.

Fino has already initiated preparations for this transition by building specialized teams and enhancing organizational depth. The bank has started pilots for secured credit products like gold loans, loans against property, and home loans in partnership with institutions such as IIFL Finance, Muthoot Finance, Ugro Capital, Bajaj Auto Credit, and Mahindra Finance.

In terms of financial performance, Fino reported a 23% year-on-year rise in revenue to ₹494 crore for the fourth quarter and an 18% increase in profit before tax to ₹30 crore. The bank’s deposit base also saw a significant increase, up by 39% year-on-year to ₹1,890 crore as of the December quarter.

Fino’s transition to an SFB is part of its broader strategy to offer a differentiated banking model that leverages digital platforms and focuses on rural credit growth. The bank plans to invest ₹90–100 crore in FY26 to support this transition, aiming to deepen digital engagement and broaden its customer base.

Emkay Global Financial has expressed optimism about Fino’s prospects, maintaining a ‘Buy’ rating with a target price of ₹300, citing the bank’s unique position in the payments and lending space.

Sources