AU Small Finance Bank has received the in-principle approval for universal bank licence from the Reserve Bank of India.

The in-principle nod to operate as a universal bank, according to the regulator, was granted under the RBI's process for small finance banks to graduate to universal bank status. 

"The Reserve Bank has decided to grant 'in-principle’ approval to AU Small Finance Bank Limited (AUSFB) for transitioning from a small finance bank to a universal bank," the RBI said in its release.

The regulator added it may be recalled that the guidelines for licensing of small finance banks in the private sector,  dated November 27, 2014, had provided a transition path for SFBs to convert into universal banks subject to the SFB’s fulfilling minimum paid-up capital/net worth requirement as applicable to universal banks, satisfactory track record of performance as an SFB for a minimum period of five years and RBI’s due diligence exercise. 

Further, with the objective of bringing better clarity, the eligibility criteria for an SFB to transition into a universal bank were detailed in the circular issued on April 26, 2024 on "voluntary transition of small finance banks to universal banks," it added.