AU Small Finance Bank could be the first small finance bank to take advantage of the Reserve Bank of India’s recent framework for small finance banks to become a universal bank.

Welcoming the guidelines on voluntary transition of small finance banks to universal banks, Uttam Tibrewal, ED & Deputy CEO, AU Small Finance Bank said the bank will soon deliberate converting to universal bank very soon with its board. “The recent RBI Guidelines on voluntary transition of Small Finance Banks to Universal Bank, is a welcome step and provides clarity to all SFBs,” said Tibrewal.

Adding that AU SFB seems to be ticking the boxes required for the conversion process he added, “we are in the process of studying the circular in detail and will be discussing with our Board in the near future on the next course of action”.

According to the guidelines issued by the RBI on Friday last week, SFBs meeting the following conditions can seek for converting to universal bank, having a minimum net worth of ₹1,000 crore as at the end of the previous audited quarter, meeting the prescribed capital adequacy requirements for SFBs, having net profit in the last two financial years and having gross and net non-performing assets of less than or equal to 3 per cent and 1 per cent respectively in the last two financial years.

The SFB should also be listed in the bourses and been in operation for a minimum of five years before seeking to become a universal bank. Presently, there are five listed small finance banks including AU: Equitas, Ujjivan, Jana, ESAF, Suryoday and Capital SFB.

In October 2023, AU SFB announced its merger with Fincare SFB and the received the RBI approval for the same in March 2024. “Currently, we are focused on ensuring a smooth integration with Fincare SFB and scaling our recently launched Authorised Dealer-I business of cross border trade and Forex for our customers,” said Tibrewal.