AU Small Finance Bank gets RBI approval to become a universal bank

AU Small Finance Bank becomes first SFB to get RBI nod to transition into a Universal Bank

• Date: August 8, 2025
• Significance: First such approval in over 11 years; first among Small Finance Banks (SFBs) to receive regulatory nod.
• Details:
  • AU SFB: Largest SFB in India with ₹2.40 trillion total business (~40% SFB market share).
  • Loan book: ₹13,413 cr (FY18) → ₹1.09 trillion (2025).
  • Deposits: ₹7,923 cr → ₹1.24 trillion.
  • Origin: Started in 1996 in Jaipur as vehicle financing company; NBFC in 2000s; SFB license in 2015; operational as SFB from 2017.
  • Acquired Fincare SFB in 2024 (first merger in SFB space).
• Regulatory Context:
  • RBI norms for voluntary SFB-to-universal bank conversion released April 2024.
  • AU applied in Sept 2024; meets all criteria.
  • PSL mandate for SFBs: 60% (earlier 75%); AU at 80%. For universal banks: 40%. This will free funds for mid-corporate lending (yields ~12%).
  • Lower deposit costs expected, more corporate client servicing possible.
• Other Applicants: Ujjivan SFB & Jana SFB (pending).
• Past Universal Bank Approvals: 2014 – Bandhan & IDFC.
  
  Updated: Aug 07, 2025 | 11:46 PM IST – Business Standard