Fino Payments Bank Gets RBI Nod for SFB, Reports Strong Growth

Introduction

Fino Payments Bank has achieved a significant milestone, securing an in-principle approval from the Reserve Bank of India (RBI) to convert into a Small Finance Bank (SFB). This development, a first for any payments bank in India, positions Fino for a new phase of growth, allowing it to expand its services into lending. The approval comes as the bank reports robust financial and operational performance, driven by a surge in digital transactions and a growing customer base.

A Landmark Approval for SFB Conversion

In December 2025, the RBI granted Fino Payments Bank the crucial in-principle nod to transition into an SFB. This move is a testament to the bank's successful execution of its business model and its strong financial health. Once the final approvals are in place, Fino will be able to offer credit products, including loans to individuals and small businesses, significantly broadening its product portfolio and revenue streams. This transition marks a strategic evolution from a payments-focused institution to a more comprehensive banking entity, aiming to deepen financial inclusion across the country.

Strong Financial Performance

The bank's journey towards the SFB license is supported by strong financial results. For the fiscal year 2025 (FY25), Fino reported a 25% year-on-year increase in revenue, reaching ₹1,847.1 crores. Profit Before Tax (PBT) grew by 26% to ₹108.3 crores, marking the fifth consecutive year of profitability. More recent data from Q3 FY26 shows an EBITDA of ₹63.9 crores, a 6% YoY growth, with the bank achieving its highest-ever EBITDA margin of 16.2%. While total revenue for Q3'26 saw a decline to ₹394.4 crores due to shifts in the traditional transaction business, net revenue remained stable, highlighting improved revenue quality from a better product mix.

Key Financial Highlights

Digital Surge and Customer Acquisition

Fino's growth is heavily powered by its digital-first strategy. In FY25, the total value of transactions processed grew by 29% to ₹4.61 lakh crores. Digital throughput was a standout performer, surging 70% to ₹2.25 lakh crores and now accounting for 49% of all transactions. This digital momentum continued into FY26, with digital throughput in Q3'26 rising 12% YoY to ₹66.1 thousand crores. This digital uptake is mirrored in customer growth. The bank's customer base expanded to 1.68 crore by December 2025, a 25% increase from the previous year. The number of digitally active customers also grew by 22% YoY to nearly 60 lakh, demonstrating increasing engagement and platform stickiness.

Strengthening the Core Business

The bank's focus on its Transaction, Acquisition, and Monetization (TAM) strategy is yielding positive results. A key pillar of this strategy is the growth of its Current Account Savings Account (CASA) portfolio. In FY25, CASA revenue grew by 43% to ₹544 crores, contributing 30% of the total income. Average deposits have shown consistent growth, increasing 32% YoY to ₹2,496 crores in Q3'26. This growing deposit base provides the bank with a low cost of funds, which stood at approximately 2.2% as of March 2025, a significant competitive advantage as it prepares to enter the lending market.

Operational Metrics and Network Strength

Technological Backbone and Future Readiness

To support its scaling ambitions, Fino is heavily investing in its technology infrastructure. The bank recently completed its migration to the Finacle core banking system in January 2026. This upgrade is critical for enhancing operational efficiency, improving customer experience, and supporting the expanded product suite that will come with the SFB license. The bank's asset-light, 'phygital' model, which combines a vast network of over two million merchant points covering 97% of India's pincodes with robust digital platforms, remains its core strength in reaching underserved markets.

The Road Ahead

With the SFB approval in hand, Fino Payments Bank is poised for a transformative chapter. The bank has already piloted a loan referral business, which saw disbursements grow over sixfold from ₹33 crores to ₹200 crores between Q4 FY24 and Q4 FY25. This provides a strong foundation for building its own lending book. The management's focus will be on completing the regulatory transition to an SFB while continuing to execute its TAM strategy. The combination of a strong distribution network, a growing and engaged customer base, a low-cost deposit franchise, and an upgraded tech stack positions Fino to capitalize on the immense opportunities in India's financial services landscape.