Payments Banks can apply for conversion into SFB after five years of operations if they are otherwise eligible as per the guidelines.
Fino Payments Bank has submitted an application to the Reserve Bank of India (RBI) for a license to operate as a small finance bank (SFB).
On July 28, the board of the bank endorsed the proposal to transform the bank into an SFB. Additionally, the payment bank announced the formation of a committee tasked with investigating the potential for group corporate restructuring, assessing its implications, and considering other relevant factors.
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SFBs are a type of niche bank established by the Reserve Bank of India (RBI) in 2016 to promote financial inclusion. Their main goal is to provide basic banking services like accepting deposits and offering loans to underserved and unbanked sections of the country, such as small businesses, industries, or marginal farmers.
“During the quarter ended December 31, 2023, the Reserve Bank of India has received one application under the Guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector dated December 05, 2019 from Fino Payments Bank Limited,” RBI said in a statement on January 8.
The regulator is examining the application and awaiting further comments from the RBI as per the process, Fino said.
“The Bank continues its thrust on acquiring new customers and has registered an 85 percent year-on-year (YOY) growth in profit. With each passing quarter, the Bank is progressively enhancing its sustainability and is well-positioned to leverage its network,” the bank had earlier said.
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The RBI on Monday raised the minimum capital requirement for small finance banks to Rs 200 crore and permitted Payments Bank to upgrade as SFBs. Incidentally, the net worth of all SFBs currently in operation is over Rs 200 crore.
Issuing the revised guidelines, RBI said that for Primary (Urban) Co-operative Banks (UCBs) desirous of voluntarily transiting into SFBs, the initial requirement of net worth would be at Rs 100 crore, which will have to be increased to Rs 200 crore within five years from the date of commencement of business.
Payments Banks can apply for conversion into SFB after five years of operations if they are otherwise eligible as per the guidelines, it said.
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Fino Payments Bank Q2 earnings
In the second quarter of the financial year 2023-24 (FY24), Fino Payments Bank experienced a significant 41.5 percent year-on-year (YoY) increase in its consolidated profit after tax (PAT), reaching Rs 19.5 crore. This notable growth can be attributed to robust transactional activity and an expanding user base. For reference, the bank reported a PAT of Rs 13.8 crore in the same period last year.
The bank witnessed an 18.2 percent rise in revenue, reaching Rs 358.6 crore in Q2 FY23, compared to Rs 303.3 crore. Concurrently, the total expenditure, excluding provisions and contingencies, saw a 16.9 percent increase, reaching Rs 338.50 crore compared to Rs 289.5 crore in the corresponding period of the previous year.
