RBI Grade BNABARD ESISEBI
In one line
Context:
Fino Payments Bank clarified that its transition to a Small Finance Bank (SFB) remains on schedule despite recent developments involving its Managing Director and CEO.
Background
Fino Payments Bank received in-principle approval from the Reserve Bank of India to transition into a Small Finance Bank (SFB). This comes amid the arrest of its Managing Director and CEO, Rishi Gupta, in connection with alleged Goods and Services Tax (GST)-related violations.
What is a Small Finance Bank (SFB)?
Small Finance Banks are financial institutions licensed by the RBI to:
- Promote financial inclusion
- Provide basic banking services to underserved sections
- Extend credit to small businesses, micro enterprises, farmers, and unorganised sectors
Unlike Payments Banks, SFBs can:
“RBI MPC Unpacked: Key Theory Meets Today’s Macro Trends”Tap to play · from the C4S channel
- Accept deposits without restrictions
- Lend extensively, including larger loan products
- Offer a broader range of financial services
Payments Bank vs Small Finance Bank (SFB)
| Basis of Comparison | Payments Bank | Small Finance Bank (SFB) |
|---|---|---|
| Regulator | Reserve Bank of India | Reserve Bank of India |
| Objective | Promote financial inclusion through payments and deposit services | Promote financial inclusion through deposits and credit delivery |
| Lending Facility | Not allowed to lend | Allowed to provide loans |
| Deposit Acceptance | Demand deposits only (subject to RBI cap) | Demand and time deposits allowed |
| Revenue Model | Transaction fees, remittances, third-party product distribution | Interest income from loans + fee-based services |
| Priority Sector Lending (PSL) | Payments Banks have no mandated PSL targets. | 60% of ANBC or CEOBE (whichever is higher), effective FY 2025–26 — of which 40% to specified PSL sub-sectors + 20% flexible |
| Capital Requirement | Minimum ₹100 crore | Minimum ₹200 crore |
| Target Customers | Migrant workers, low-income households, small businesses | MSMEs, small farmers, informal sector, low-income individuals |
| Banking Scope | Limited banking functions | Full-service banking (within SFB framework) |
| Investment Pattern | Major portion invested in government securities | Diversified lending and investment portfolio |
ANBC vs CEOBE
Banks must calculate their PSL target based on the higher of the following two:
- ANBC (Adjusted Net Bank Credit)
Total bank credit plus investments made in non-SLR bonds (after adjustments). - CEOBE (Credit Equivalent of Off-Balance Sheet Exposures)
Includes off-balance sheet items like guarantees, letters of credit converted into credit equivalents.
The higher value between ANBC or CEOBE becomes the base for PSL target calculation.
