Inside Fino Payments Bank’s Troubles And Transition To A Small Finance Bank

by · Inc42

SUMMARY

  • Fino's net profit fell 43% YoY in FY26 and 70% in Q4, however, the downturn had already been building for multiple quarters before the CEO crisis
  • RBI’s remittance clampdown hurt money transfer, NBFC/MFI stress dragged CMS revenues, and a pullback from digital payments further shrank the growth
  • The CEO arrest accelerated scrutiny and led to shutting UPI merchant business, tighter onboarding
  • Added to Saved Stories in Login

Fino Payments Bank, which has been in choppy waters since the arrest of its CEO Rishi Gupta in February, saw its net profit slump 43% YoY to ₹52.5 Cr in FY26. In the final quarter, Q4 FY26, the payments bank’s net profit plummeted 70% to ₹7.1 Cr from ₹24 Cr in the same quarter a year earlier. 

While the arrest of its CEO brought the company under intense scrutiny in the March quarter, its revenues and profits have been on a declining trend for the first few quarters. 

There are three reasons behind this. The first was the collapse of the domestic money transfer business. In November 2024, the RBI issued a circular that effectively killed a large chunk of bank-led remittance transactions. This move impacted the entire industry-wide, but Fino was among the most exposed institutions.

Secondly, the stress in the NBFC and microfinance sector over the past few quarters also impacted the payments bank. Fino earns a significant revenue through its Cash Management Services and BC Banking segments, which together contributed 15% of revenues in FY25 and are heavily dependent on NBFC and MFI activity, with NBFC & MFI clients accounting for 59% of CMS throughput in FY25.