Fino Payments Bank Faces Revenue Drop, Records Deposits as SFB Transition Continues

The bank reported a 31% year-on-year revenue decline in Q4 FY26, falling to ₹340 crore. Simultaneously, its deposit balance reached an all-time high of ₹2,957 crore.

Key Developments from Earnings Call

Fino Payments Bank convened its Q4 and full-year FY26 earnings call on April 30, 2026, highlighting business resilience amid ongoing regulatory reviews and specific Q4 challenges. Management confirmed the completion of its ₹200 crore migration to the Finacle core banking system.

The bank deliberately reduced B2B digital throughput by 17% sequentially, exiting certain partnerships to prioritize compliance, which contributed to the revenue fall.

Deposit balances hit a record ₹2,957 crore, with customer deposit accounts (CASA) growing 22% year-on-year to 1.75 crore accounts. The referral lending business showed strong traction, disbursing ₹1,300 crore in FY26.

Discussions also addressed the ongoing 'special review' concerning the status of MD & CEO Rishi Gupta, who has been unavailable for an extended period due to a pending RBI reassessment of his 'fit and proper' status following his arrest in February 2026.

Why This Matters

The transition to a Small Finance Bank (SFB) is a critical strategic move for Fino, promising expanded lending capabilities and higher deposit limits. However, the sharp revenue decline highlights the challenges of regulatory recalibration and operational pauses.

Leadership continuity remains a key concern, with the outcome of the review for the MD & CEO role potentially impacting strategic execution and market confidence.

Background: The SFB Path and Leadership Uncertainty

Fino Payments Bank received 'in-principle' approval from the Reserve Bank of India (RBI) on December 5, 2025, to convert into a Small Finance Bank (SFB). This approval follows its application in December 2023 and marks a significant step towards becoming a full-service bank.

The migration to the Finacle core banking system was successfully completed in January 2026, a crucial technological upgrade intended to support future growth and operational efficiency.

MD & CEO Rishi Gupta's unavailability since February 2026, linked to a GST investigation and subsequent 'fit and proper' status review by the RBI, has created leadership uncertainty. An interim CEO has been appointed to ensure operational continuity.

What Changes With SFB Transition

As an SFB, Fino will be permitted to offer a wider range of services, including lending to individuals and MSMEs, and will no longer be subject to deposit caps applicable to payments banks.

The bank is expected to leverage its upgraded Finacle system for enhanced transaction throughput, system resilience, and faster product launches across various digital platforms.

There will be a continued focus on compliance and risk management, as evidenced by the strategic exit from certain partnerships that impacted short-term revenue but aimed at long-term stability.

Risks to Monitor

Revenue pressure persists due to the ongoing recalibration of the business model and the pause in certain high-margin digital segments like UPI P2M.

Execution risk remains for the SFB transition, as the bank must meet multiple stipulated regulatory conditions, including network thresholds.

The uncertainty surrounding the MD & CEO's status and the outcome of the 'special review' could impact strategic decision-making and investor confidence.

Past regulatory breaches, including RBI penalties for operational guideline violations and a SEBI settlement, highlight the importance of stringent compliance adherence.

Peer Comparison

Fino Payments Bank aims to join the ranks of SFBs like Ujjivan Small Finance Bank and Equitas Small Finance Bank. While SFBs can offer lending services, Fino's Q4 revenue drop contrasts with the growth narratives of many established SFBs. Competitors like Airtel Payments Bank and India Post Payments Bank continue to leverage their extensive networks, posing stiff competition in the payments banking space before Fino's full SFB transition.

Key Performance Metrics

• Average deposits for FY'26 increased by 30% YoY to ₹ 2,403 crore, with peak EOD total deposit reaching ₹ 2,957 crore in March'26.
• Active FinoPay users grew 25% YoY to 8.2 lakh in March'26.
• Referral loan disbursements amounted to ₹ 1,285 crores in FY'26, a 3.5x YoY increase.

Looking Ahead: Key Milestones

Monitor the timeline and conditions for the final SFB license approval from the RBI.

Follow developments regarding the 'special review' and the resolution of the MD & CEO leadership situation.

Observe the bank's ability to resume growth in digital throughput and revenue streams without compromising compliance.

Assess the progress on achieving SFB-specific regulatory requirements, such as network thresholds and capital adequacy.

Evaluate the performance of the referral lending business as a precursor to broader SFB lending operations.

Track the bank's progress towards its stated profitability targets, including an 8% to 10% Net Interest Margin and a 20% ROE by FY'30.