AU Small Finance Bank gets RBI nod to become a universal bank
AU Small Finance Bank becomes the first SFB in the country to bag the license from RBI to set up a universal bank. It was founded in 1996 by Sanjay Agarwal, a first generation entrepreneur and began its banking journey in April 2017.
Kolkata: Set up in 1996, AU Small Finance Bank becomes the first entity of its kind in the country to receive the license from RBI to set up a universal bank. There are 11 small finance banks in the country right now, according to the RBI website.
AU Small Finance Bank first wrote to the banking regulator for a license on September 3, 2024. The in-principle nod came on August 7, 2025. There are seven small finance banks that are listed. AU Small Finance Bank becomes the first SFB to be a listed SFB to secure a universal banking license.
Small finance banks in India
According to the RBI, the following are the small finance banks in the country. These are:
Au Small Finance Bank: HQ Jaipur
Capital Small Finance Bank: Jalandhar
Equitas Small Finance Bank: Chennai
ESAF Small Finance Bank: Thrissur
Suryoday Small Finance Bank: Maharashtra
Ujjivan Small Finance Bank: Bengaluru
Utkarsh Small Finance Bank: Varanasi
Jana Small finance Bank: Bengaluru
Slice Small Finance Bank: Guwahati
Shivalik Small Finance Bank: New Delhi
Unity Small Finance Bank: New Delhi
The following banks are listed in the Indian stock exchanges: Au Small Finance Bank, Capital Small Finance Bank, Equitas Small Finance Bank, Jana Small Finance Bank, Suryoday Small Finance Bank, Ujjivan Small Finance Bank, Utkarsh Small Finance Bank.
What the license says
"It may be recalled that the Guidelines for licensing of Small Finance Banks in the Private Sector dated November 27, 2014 had provided a transition path for SFBs to convert into Universal Banks subject to the SFB’s fulfilling minimum paid-up capital/net worth requirement as applicable to Universal Banks, satisfactory track record of performance as an SFB for a minimum period of five years and RBI’s due diligence exercise. Further, to bring better clarity, the eligibility criteria for an SFB to transition into a Universal bank were detailed in the Circular issued on April 26, 2024, on "Voluntary transition of Small Finance Banks to Universal Banks."
As required by the rules, the management of the SFB communicated the development to capital markets regulator Sebi. "We have made history by receiving in-principle approval from the Reserve Bank of India to transition into a Universal Bank. This milestone is a reaffirmation of our purpose, perseverance, and passion. We are deeply grateful to the Government of India and the Reserve Bank of India for nurturing an ecosystem where institutions like AU can grow with integrity," said Sanjay Agarwal, Founder, MD & CEO of AU Small Finance Bank.
Utility of small finance banks
The basic utility of an SFB lies in the fact that it delivers basic banking services mostly to the unserved and underserved sections in the rural areas. SFBs are mandated to accept deposits and offer loan products. However, it is not permitted to set up subsidiaries to offer any non-banking financial services (say, set up an asset management company).