The ASX-listed scrip of digital payments provider Novatti rallied on Tuesday after the company indicated that a decision regarding its application for a restricted banking licence would be known by the end of February.

In an ASX filing Novatti said it continues to work with APRA for approval of its restricted licence and that it was now in the final stages of the process.

Novatti shareholders have waited more than three years for the restricted licence after its application was lodged in November 2018.

While that is a relatively long time for a licence that heavily circumscribes the amount of lending and deposit-taking a holder can make, managing director Peter Cook is optimistic that the process is nearing completion.

“We are excited to be moving into the final phases of this process,” said Cook.

“Our application has unfortunately coincided with disruptions to processing, including an extended pause on the approval of new applications during COVID-19. 

“However, our plans continue to be supported by the strong momentum we are seeing from consumers and investors backing fintechs to provide new and innovative banking services.” 

“While we aimed to achieve regulatory approval by the end of November this year, we are advised by the regulator that the assessment of our application remains ongoing.”

Novatti would be the seventh applicant approved under APRA’s restricted licensing regime following in a path paved by Volt Bank (which has converted to a full licence), 86 400 ( now a NAB subsidiary), the defunct Xinja business, IN1Bank Ltd, Alex and Avenue Bank.

Novatti’s share price surged on Cook’s comments to close up 3.5 cents or 11.3 per cent to 34 cents.

The rally reversed a four-month bear run for the stock, which resulted in the company’s market valuation sliding by 50 per cent.