Shares of Fino Payments Bank are trading as much as 9% lower on Monday, December 8, despite the lender receiving in-principle approval from the Reserve Bank of India (RBI) to convert into a Small Finance Bank.

This clears the first major regulatory hurdle for Fino, positioning it to become the first payments bank in the country to transition into a full-fledged SFB.

The bank, which began operations with a payments bank licence in 2017, will continue to function in its current form until it secures final approval and begins SFB operations.

The conversion marks a major shift in Fino's business model. As an SFB, it will gain the ability to lend, accept unrestricted deposits and operate as a full-service bank.

It will also receive general permission to open branches and outlets from the fi

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