Shares of Fino Payments Bank saw a sharp fall on Monday as the stock recorded its biggest single day drop. The share price slipped over 12% to close at Rs 275 on the NSE. This decline came even as the company received the Reserve Bank of India’s approval to move from a payments bank to a small finance bank.
Market watchers said the fall may have resulted from profit booking after a strong 15% rise in the stock over the past two weeks. The broader market weakness also added pressure, with the Nifty Smallcap 100 index dropping 2.6% on the same day. Last week, the bank revealed that it had secured the RBI’s approval, making it the first payments bank to begin the transition into a small finance bank. The lender had submitted its application for approval two years ago and now has 18 months to complete the shift.
Analysts at a brokerage firm said Fino is expected to remain focused on payment services during the early phase of the transition while slowly expanding its lending operations by tapping its current customer base to maintain quality and profitability. The report noted that the bank plans to build a lending asset under management of Rs 5000 crore between FY28 and FY30. This will include 65 to 70 per cent MSME loans and 30 to 35% loans against property and mortgages. The lending business is expected to contribute 20 to 25% of total revenue by the end of the first three years of its small finance bank operations.
The report added that the loan book may initially reflect higher blended yields due to the MSME share, while a gradual move toward secured lending could bring some yield moderation, partly supported by lower funding costs. As per regulatory guidelines, the bank will need to keep promoter shareholding at a minimum of 40% for the first five years, which must be reduced to 26% within 15 years. At present, Fino Paytech holds 75% in the bank. In an interview to a common publication, Rishi Gupta, Managing Director and Chief Executive Officer of Fino Payments Bank, said they will take a careful approach to lending. “We will focus on a few geographies and a few points of contact. We will not open lending in every part of the country. This is our plan as of now. On the deposit side, however, we will continue to grow and build,” he said.
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