Bank stock falls 9% even after RBI’s approval to shift to Small Finance Bank

Synopsis: Fino Payments Bank shares fell 9% despite RBI’s approval to transition into a Small Finance Bank, as investors remain cautious about heavy regulatory requirements, higher capital needs, and operational challenges that could strain its existing digital-first business model.

This company is a growing fintech company offering a diverse range of financial products and services that are primarily digital and have a payments focus and it offers such products and services to the target market via a Pan-India distribution network is now in the spotlight after RBI’s in-principle approval for transitioning to a Small Finance Bank (SFB).

With market capitalization of Rs. 2,402 cr, the shares of Fino Payments Bank Ltd are currently trading at Rs. 288 per share, dropping by 9% in today’s market session making a low of Rs. 285, from its previous close of Rs. 314.65 per share

News

Fino Payments Bank’s shares slid about 9% on December 8, 2025 despite RBI’s in-principle approval for transitioning to a Small Finance Bank (SFB). This drop reflects investor concerns over the shift’s regulatory demands, despite the upgrade enabling lending, unrestricted deposits, branch expansion, and full-service banking.​

The conversion elevates Fino from its payments bank limits focused on fee-based digital transactions without lending into a lender with broader revenue potential via interest income and deposits. It allows unrestricted branch openings and operations akin to full banks, positioning Fino for growth in underserved segments.​

Key Regulatory Obligations

Fino must establish 25% of outlets in unbanked rural centers within one year, achieve Rs. 300 crore net worth within 18 months, and maintain 15% capital adequacy (including 7.5% Tier I). Additional mandates include 60% Priority Sector Lending (PSL) exposure with half in loans up to Rs. 25 lakh and CRR/SLR compliance and promoter stake retention at 40% for five years, diluting to 26% over 15 years.​

Investors likely view these as heavy compliance burdens, raising operational costs for rural expansion and capital infusion that could strain Fino’s current model. The shift risks diluting its low-cost, digital payments focus amid execution uncertainties in a competitive SFB space. 

About the company 

Fino Payments Bank Ltd is a fast-growing fintech-driven bank focused on digital payments and financial services, operating through a widespread Pan-India distribution network. It primarily serves mass-market and underserved segments with convenient, technology-led banking solutions. The bank emphasizes low-cost, high-volume transactions and financial inclusion through its extensive merchant and partner ecosystem.

Sales rose 26% YoY, increasing from Rs. 47.8 crore in Q2FY25 to Rs. 60.1 crore in Q2FY26. Despite higher revenues, operating performance remained negative as EBITDA improved by around 18% YoY, with losses narrowing from Rs. 357 crore to Rs. 291 crore. Net profit declined 27% YoY, falling from Rs. 21.2 crore to Rs. 15.4 crore, while EPS dropped 28% YoY from Rs. 2.54 to Rs. 1.84.

Written by Manideep Appana

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