RBI grants approval to AU Small Finance Bank to transition into a universal bank

The Reserve Bank of India (RBI) has granted 'in-principle' approval to AU Small Finance Bank to transition into a universal bank from a small finance bank.

The RBI's approval came after AU Small Finance Bank fulfilled RBI's minimum paid-up capital/net worth requirement as applicable to become a universal bank. The bank showcased satisfactory track record of performance as aa SFB for a minimum period of five years and also fulfilled RBI’s due diligence exercise.

Earlier this week, AU Small Finance Bank said that it has entered into a strategic corporate agency partnership with SBI Life Insurance to enhance access to comprehensive insurance solutions nationwide, supporting the government’s ‘Insurance for All by 2047’ mission by extending financial protection to underserved and emerging markets across India.

"With this alliance, AU SFB will distribute SBI Life’s comprehensive portfolio of life insurance solutions, including protection, savings & investments, child, money back, retirement etc. across its robust network of over 2,505 banking touchpoints in 21 states and 4 union territories. This integration will enable customers to meet diverse protection and long-term financial planning needs through a unified banking and insurance experience," AU Small Finance Bank said in a press release.

Last month, AU Small Finance Bank reported net profit of ₹581 crore in the first quarter of current financial year, marking an increase of 16% from ₹502.57 crore in the same period last year. Its net interest income came in at ₹2,045 crore as against ₹1,921 crore, up 6.45% annually.

AU Small Finance Bank, a scheduled commercial bank, is India’s largest small finance bank. Founded in 1996 by first-generation entrepreneur Sanjay Agarwal, AU began its banking operations in April 2017.

AU Small Finance Bank shares ended 1.27% higher at ₹744 on the BSE ahead of RBI's announcement of turning into a universal bank. The bank has market capitalisation of ₹55,458 crore.