Fino Payments Bank Eyes Lending Expansion After SFB Approval

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AuthorRiya Kapoor|Published at:
Fino Payments Bank Eyes Lending Expansion After SFB Approval
Overview

Fino Payments Bank is set to pivot towards secured lending after receiving in-principle approval from the RBI to convert into a small finance bank. The digital-first institution plans to leverage its extensive network of over 20 lakh merchants and 1.6 crore customers to layer lending products onto existing payment relationships, bolstering its CASA base and revenue diversification.

SFB Conversion Paves Way for Lending

Fino Payments Bank is poised for a strategic transformation following the Reserve Bank of India's early December in-principle approval for its conversion into a small finance bank. This crucial regulatory step will unlock lending capabilities, enabling Fino to significantly expand its product offerings beyond core payments and distribution services. The move represents a major evolution for the digital-first institution.

Leveraging Digital-First Scale

Unlike many small finance banks that originate from microfinance backgrounds, Fino Payments Bank has built its foundation on a digital-first, transaction-led model. The bank boasts an impressive ecosystem, featuring over 20 lakh merchants and 1.6 crore customers. A substantial segment, comprising 60 lakh users, is actively engaged on the Unified Payments Interface (UPI) platform. This extensive network serves as a ready base to introduce new financial products, including deposits and loans, directly integrating them into existing payment workflows.

Expanding Into Secured Lending

The primary strategic objective post-conversion is the aggressive expansion into secured lending. This focus aims to diversify revenue streams and enhance the bank's asset portfolio by offering loans backed by collateral. This transition marks a significant shift from its current operational scope, targeting a broader financial services market.

Funding and Growth Strategy

Fino Payments Bank currently manages deposits exceeding ₹3,000 crore, which have been mobilized at a remarkably low cost of under 2%. The bank anticipates mobilizing an additional ₹600 to ₹800 crore annually. This ongoing infusion of funds is critical for building a stable Current Account Savings Account (CASA) base, ensuring a cost-effective funding structure to support its burgeoning lending operations and future growth initiatives.

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