Fino Payments Bank rallies 20% as loan growth offsets transaction drop
Fino Payments Bank shares surged 20% after a June update showed strong deposit and loan referral growth, signaling progress in its pivot to a small finance bank model despite ongoing declines in cash-based transactions.
Fino Payments Bank shares jumped 20% to hit the upper circuit on Monday, marking the stock’s steepest intraday gain in years. The rally followed a Friday evening operational update showing accelerating growth in the lender's deposit franchise and pilot credit business. The surge extended July’s rebound to 13.4%, the stock's best monthly performance since August 2024.
For investors, the update provides the first concrete evidence that Fino's transition toward a full banking model is gaining traction. Average total deposits climbed 11% year-on-year to ₹2,755 crore in June. The bank added roughly 3.1 lakh new accounts, expanding its total customer base to 1.8 crore, while monthly active users on its FinoPay application surged 38% to 8.4 lakh.
The most critical metric for the bank's future valuation is its credit pivot, which is central to securing a Small Finance Bank license. Loan referral disbursals skyrocketed 3.5 times year-on-year to ₹240 crore, demonstrating the credit potential within its existing ecosystem. To scale this operation, Fino partnered with fintech Ezee.ai in June to deploy artificial intelligence-powered loan origination and collections systems.
Despite these positive shifts, the bank's legacy transaction business remains under severe structural pressure. Throughput from remittances, micro-ATMs, and AePS transactions fell 35% year-on-year to ₹2,830 crore. Management attributed the drop to the economy's accelerated migration toward UPI, as well as a strategic decision to focus on higher-quality merchants, though it noted the pace of decline is finally moderating.
Despite the sharp recent bounce, the stock is still trading 50% below its 52-week high. The shares had previously plummeted for four consecutive months through March 2026, shedding 63% of their value and sitting 72% below a November 2021 peak of ₹583. Market participants will now be watching closely to see if improving lending metrics can eventually offset the structural decline of its legacy cash-handling operations.
