Fino Payments Bank, a subsidiary of Fino Paytech Limited, has taken a significant step in its evolution by applying for a small finance bank (SFB) license from the Reserve Bank of India (RBI). The move follows the approval of the proposal by the bank’s board in July 2023, which also marked the initiation of a committee to evaluate a potential reverse merger with its parent entity.
In accordance with the “Guidelines for on-tap licensing” of SFBs, the RBI confirmed the receipt of Fino Payments Bank’s application in a statement released on Monday, January 8. The bank envisions its SFB model as a “Payments Bank++,” distinguishing itself from existing players by targeting fee-based income to constitute 75% to 80% of its revenue in the initial operational years.
With a net worth of approximately INR 600 Cr, Fino Payments Bank comfortably surpasses the current minimum capital requirement of INR 200 Cr for small finance banks. The bank, which commenced operations on June 30, 2017, boasts a notable list of investors, including Bharat Petroleum, ICICI group, Blackstone, IFC, Intel, and LIC.
Fino Payments Bank operates on an asset-light business model, relying predominantly on fee and commission-based income derived from merchant networks and strategic commercial partnerships. The bank’s platform facilitated an impressive 120.7 Cr transactions with a gross transaction value exceeding INR 2.55 Lakh Cr in the financial year 2022-23. Turning profitable in the fourth quarter of 2019-20, the bank sustained profitability, registering a profit of INR 65.1 Cr in FY23.
In the second quarter of FY24, Fino Payments Bank continued its robust performance, facilitating transactions worth INR 86,568 Cr, with over INR 23,051 Cr processed digitally. The bank reported a Profit After Tax (PAT) of INR 19.5 Cr during this period.
The RBI has received numerous applications for SFB licenses, with varying outcomes for applicants. Notably, in October 2021, a license was issued to the consortium of Centrum Financial Services Limited and Bharatpe’s parent Resilient Innovations. However, in July 2023, three applications were rejected. Fino Payments Bank now joins other payments banks such as Paytm Payments Bank and Jio Payments Bank in the pursuit of an SFB license.
