RBI’s Double Strike: J&K Bank Fined as Fino Gets Green Light to Become SFB

Updated: December 05, 2025 18:41

Image Source : The Kashmir Monitor

The Reserve Bank of India has imposed a ₹9.9 million monetary penalty on Jammu & Kashmir Bank for regulatory non-compliances, even as it granted in‑principle approval to Fino Payments Bank to convert into a Small Finance Bank. The twin moves underline RBI’s tough-but-enabling approach to banking regulation and financial inclusion.

Penalty for Jammu & Kashmir Bank

RBI has ordered a ₹99 lakh penalty on Jammu & Kashmir Bank after finding deficiencies against earlier directions on KYC, small accounts and related compliance areas during supervisory review. The central bank clarified that the action is for regulatory lapses only and does not question the validity of customer transactions or the bank’s solvency.

J&K Bank, which has faced earlier enforcement actions as well, said in its clarification that it has already strengthened its compliance framework and is addressing issues flagged by the regulator.

Green light for Fino’s SFB journey

In contrast, RBI has given an in‑principle approval to Fino Payments Bank to transition into a Small Finance Bank, subject to meeting final licensing conditions and timelines. The move will eventually allow Fino to expand from a payments‑only model into full‑fledged small‑ticket lending and deposit intermediation for its largely underbanked customer base.

Fino has long prepared for this shift, meeting net-worth and governance criteria and signalling a three‑to‑five‑year roadmap to build an SFB balance sheet once the final licence is issued.

Key highlights

RBI imposes ₹9.9 million (₹99 lakh) monetary penalty on Jammu & Kashmir Bank for KYC and related regulatory lapses; action limited to compliance failures.
J&K Bank says issues relate to past periods and claims to have strengthened its compliance and monitoring framework.
RBI grants in‑principle approval for Fino Payments Bank’s conversion into a Small Finance Bank, paving way for lending and wider deposit products.
Fino had earlier secured board approval and has been building capital and systems for an SFB transition over 3–5 years.

Together, the actions showcase RBI’s dual track of enforcing strict compliance while enabling credible players to deepen financial inclusion through upgraded bank licences.

Sources: Reserve Bank of India press releases and enforcement orders; J&K Bank

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