11:00 AM IST – Fino Payments Bank is preparing for its biggest upgrade since launch in 2017. With the RBI’s internal green light, the bank will now move towards Small Finance Bank (SFB) status. In simple terms, as per the RBI PDF published on December 05, 2025, the Reserve Bank of India (RBI) has given “in-principle” approval to Fino Payments Bank Ltd. to convert into an SFB — making it the first payments bank ever in India to get this nod.
RBI rules says – Payments Banks, which are controlled by residents and have completed five years of operations, are eligible for conversion into SFBs.
This shift is not cosmetic; it fundamentally changes the power of what the bank can offer to more than 1 crore existing customers and lakhs of merchants across India. Fino currently operates more than 14k banking outlets and micro-points that handle low-ticket cash services in tier 2 or tier 3 cities. Those same counters could soon provide fixed deposits, business loans, and larger savings options. It helps customers grow instead of just transact.
What changes for customers?
| Feature Today (Payments Bank) | What’s Coming (Small Finance Bank) |
|---|---|
| Balance limit: ₹2 lakh | No balance limit — keep more safely |
| No lending allowed | Small business, personal loans available |
| Only savings + debit + UPI | Fixed deposits, recurring deposits & more |
| Focus on payments | Focus on growth & financial progress |
| Digital-first wallet style | Real banking with branch-like services |
Why this step matters
Payments banks were introduced to promote digital payments such as QR, UPI, cash-in, cash-out, like other banks – Airtel Payments Bank and Jio Payments Bank. But customers using these banks still needed a second bank to keep higher savings or borrow money. But small businesses and low-income households want more:
- The freedom to save above ₹2 lakh
- A loan when business runs tight
- A safe place to build assets, not only to make payments
That is exactly what this transition unlocks. Fino becomes the first from this category to step into the next league.
Who benefits the most?
This announcement does not target elite customers. It targets:
- Small shop owners who rotate daily cash and need working capital
- Gig workers who want savings protection beyond wallet limits
- Women entrepreneurs who borrow informally at high interest rates
- Rural families saving cash at home due to trust issues
If successful, Fino can help shift these groups away from cash dependency and informal borrowing.
India’s rising SFB story
India currently has 11 Small Finance Banks, many focusing on common people rather than rich corporates. They help grow small businesses, self-employed workers, and rural progress. Fino joins this list and brings its payments DNA, making it more equipped to handle mass-market customers smoothly.
This is not just more banking — it’s more access.
The approval is not final yet. Fino must upgrade capital, systems, security, and lending capability as per RBI policy.
