MUMBAI, Dec. 5 -- The Reserve Bank of India on Friday said it has granted in-principle approval to Fino Payments Bank Ltd (FPBL) to transition into a small finance bank (SFB). With this, Fino becomes the first payments bank to receive such approval.

An in-principle approval gives the applicant time to meet several conditions before receiving a final SFB licence. The approval marks a milestone in Fino's 18-year journey.

Under the Reserve Bank of India's (RBI) 'on tap' licensing guidelines for small finance banks, existing payments banks controlled by residents and with at least five years of operations are eligible to apply. "The application of FPBL was assessed as per the procedure laid down in the guidelines," the RBI said.

Fino appli...