The board of AU Small Finance Bank (AU SFB) on Thursday approved a proposal for its conversion into an universal bank.
The small finance bank (SFB) said in a regulatory filing that it will file an application with the Reserve Bank of India (RBI) for the transition into a universal bank.
This is pursuant to RBI guidelines for ‘on tap’ licensing of universal banks in the private sector announced on August 1, 2016 and the banking regulator’s circular on voluntary transition of SFBs to universal banks of April 26, 2024.
The Jaipur-based SFB added that its board has constituted a committee of directors to vet the application for submission with the RBI.
In its circular, the central bank had set stringent rules for such a transition.
It said that the SFBs should have gross a non-performing assets and net non-performing assets ratio of 3 per cent and 1 per cent, respectively, in the last two financial years.
They should also have a net profit in the last two financial years, a minimum net worth of ₹1,000 crore as at the end of the previous quarter.
It had also said that eligible SFBs having a diversified portfolio would be preferred.
The announcement came on a day AU SFB reported a 30 per cent jump in its net profit to ₹502 crore for the first quarter ended June 30.
