MFIs transforming into Small Finance Banks will face capital restructuring challenges. SFBs will have to depend on their customers’ deposits, shareholders’ equity along with ‘refinance’ facilities from bulk lenders. In this Note we discuss how SFBs can build a first class retail institution, focussed on low-income clients. It is safe to conclude that transformation of MFIs to SFBs is challenging – particularly since MFIs have only extended credit to date. In order to transform from “credit only” to “deposit mobilising” institutions, they will have to work on many areas. Some of these areas are 1. Brand repositioning 2. Investment in human capital, and 3. Complimenting savings with payments.