Reserve Bank of India (RBI) grants in-principle nod to Fino Payments Bank for small finance bank conversion

Key facts

• Fino Payments Bank becomes the first payments bank to receive RBI in-principle approval for conversion into a small finance bank.
• Post-conversion, Fino will be able to undertake on-balance sheet lending, a facility not permitted for payments banks.
• Payments banks are restricted to deploying deposits in government securities or bonds and earning fee income from payments and remittances services.
• Fino already offers third-party gold loans, housing loans, and loans against property as referral services and earns fees from these verticals.
• Only payments banks that have completed five years of operations and are resident-controlled are eligible for conversion into small finance banks.
• Entities promoted by corporates such as Airtel or Jio are not considered for such conversion.