AU Small Finance turns first in 10 yrs to get bank licence

AU Small Finance Bank on Thursday won the Reserve Bank of India's 'in-principle' approval to upgrade to a universal bank, becoming the first lender to secure a full-fledged banking licence in 10 years.

- Shayan Ghosh

An in-principle approval gives the bank time to meet several conditions before it is granted a final licence. The approval crowns a three-decade journey for AU, which started as a vehicle financier in 1996, and turned a small finance bank (SFB) in 2017.

The bank management expressed delight at the approval, calling it a moment that will go down in India's banking history. "This milestone is a reaffirmation of our purpose, perseverance, and passion," Sanjay Agarwal, founder, MD and CEO, said in a statement.

In its guidelines that paved the way for SFB licences in 2014, RBI had set out a transition path for such banks to become universal banks. This was subject to SFBs fulfilling minimum norms around paid-up capital, track record of performance, and the regulator's due diligence.