On 8 August 2025, the Reserve Bank of India (RBI) granted in-principle approval to AU Small Finance Bank (AU SFB) to transition into a universal bank. AU becomes the first SFB to receive such approval and the first universal bank approval in over 11 years. It currently commands about 40% market share among SFBs.
Eligibility Criteria for SFB to Transition into a Universal Bank
Criterion
Requirement
Scheduled Status
Must have been in the RBI’s Scheduled Banks list for at least 5 years
Stock Listing
Shares must be listed on a recognised stock exchange
Net Worth
Minimum net worth of â‚ą1,000 crore
Financial Health – Profitability
Net profits in each of the last 2 Financial Years (FYs)
Financial Health – Asset Quality
G-NPA ≤ 3% and N-NPA ≤ 1% over the last 2 FYs
Promoter Requirements
No addition or change in promoters during the transition period
Portfolio Preference
Preference given to SFBs with diversified loan portfolios
About Small Finance Banks (SFBs)
Parameter
Details
Genesis
Announced in Union Budget 2014–15
Objective
Promote financial inclusion by serving small businesses, marginal farmers, micro industries, and unorganised sector entities
Registration
Public limited company under Companies Act, 2013
Licensing
Licensed & governed under Banking Regulation Act, 1949
Capital Requirement
Minimum paid-up voting equity capital of â‚ą200 crore (except in certain cases)
Eligible Promoters
Resident individuals/professionals with ≥10 years experience in banking & finance
Difference Between Small Finance Banks and Universal Banks
Parameter
Small Finance Banks (SFBs)
Universal Banks
Primary Objective
Financial inclusion by providing credit to unserved/underserved segments like small businesses, farmers, low-income households
Provide a wide range of banking services to all segments of the economy
Customer Focus
Primarily rural and semi-urban customers, small borrowers
Both retail and corporate clients
Product Range
Savings accounts, fixed deposits, small business loans, microfinance
All banking products including corporate loans, international banking, investment banking
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