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RBI grants AU Small Finance Bank universal license, first in a decade | Current Affairs | Vision IAS
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RBI grants AU Small Finance Bank universal license, first in a decade

Posted 08 Aug 2025

2 min read

The Reserve Bank has granted ‘in-principle’ approval to AU Small Finance Bank for transitioning from a small finance bank (SFB) to a universal bank.

  • A Universal Banking Licence permits a financial institution to offer a wide array of banking services, including commercial and investment banking, under a single umbrella.
  • Last time, the universal banking licences were granted in 2014 to Bandhan Bank and IDFC Bank, which later became IDFC First Bank.

Eligibility criteria for SFB to transition into a Universal bank:

  • Status: Scheduled status for a minimum period of five years.
  • Stock Listing: Shares of the bank should have been listed on a recognised stock exchange.
  • Net Worth: Having a minimum net worth of ₹1,000 crore.
  • Financial Health:
    • Profitability: Should have net profits in the last two Financial Years(FYs).
    • Asset Quality: Gross non-performing assets (G-NPA) and net NPA (N-NPA) must be less than or equal to 3% and 1%, respectively, over the last two FYs. 
  • Promoter Requirements: No addition of new promoters or changes to existing promoters during the transition.
  • Preference: SFBs with a diversified loan portfolio will be preferred.

About Small Finance Bank (SFB)

  • Genesis: Announced in the Union budget of 2014-15. 
  • Objective: Financial Inclusion.
  • Registration: Registered as a  public limited company under the Companies Act, 2013.
  • Licensing: Licensed and governed under the Banking Regulation Act, 1949.
  • Capital Requirement: 200 crore (except for some SFBs) 
  • Eligible promoters: Resident individuals/professionals with 10 years of experience in banking and finance.
  • Tags :
  • Universal bank
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