The Reserve Bank of India (RBI) has granted AU Small Finance Bank an in-principle approval for a universal bank licence, marking the first such approval in 10 years. This development is significant, as it paves the way for AU Small Finance Bank to expand its operations and offer a wider range of banking services to its customers.
AU Small Finance Bank, which started operations in 2017 as a small finance bank, has been looking to upgrade its licence to a universal bank licence. The bank has been working towards meeting the RBI’s requirements for a universal bank licence, which includes increasing its net worth, expanding its branch network, and improving its technology and risk management systems.
The in-principle approval from the RBI is subject to certain conditions, which AU Small Finance Bank will need to fulfill within a specified timeframe. The bank will need to meet the RBI’s requirements on capital adequacy, asset quality, and governance, among other things.
The granting of a universal bank licence to AU Small Finance Bank is a notable development, as it marks the first time in 10 years that the RBI has given such an approval. The last time the RBI granted a universal bank licence was in 2014, when it gave licences to IDFC Bank and Bandhan Bank.
The approval is also seen as a positive development for the banking sector, as it will allow AU Small Finance Bank to expand its operations and offer a wider range of banking services to its customers. The bank will be able to offer services such as credit cards, investment banking, and insurance, in addition to its existing services.
The upgrade to a universal bank licence will also enable AU Small Finance Bank to compete more effectively with other banks in the country. The bank has been growing rapidly, with its assets under management increasing significantly over the past few years. The granting of a universal bank licence is expected to further accelerate the bank’s growth and expansion plans.
Overall, the in-principle approval from the RBI is a significant development for AU Small Finance Bank, and is expected to have a positive impact on the banking sector. The bank will need to work towards meeting the RBI’s conditions and requirements, but the approval marks an important milestone in its journey towards becoming a universal bank.