RBI grants universal bank status to AU Small Finance Bank: What will change for depositors and borrowers from now on?

The Reserve Bank of India (RBI) has granted in-principle approval to AU Small Finance Bank (AUSFB) to transition into a Universal Bank. This upgrade means more product variety, stronger services, and no disruption to existing accounts, interest rates, or access channels.

According to the AU Small Finance Bank’s website, “As per the RBI’s notification, AU will now begin working towards fulfilling the regulatory and operational requirements needed to complete its transition. The application for this transition was submitted on September 3, 2024, under the RBI’s ‘on tap’ licensing guidelines (August 2016) and April 2024 framework for the voluntary conversion of Small Finance Banks to Universal Banks.”

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What is the eligibility for a small finance bank to transition into a universal bank?

The eligibility criteria for an SFB to transition into a Universal bank will be as follows according to the RBI.

• Scheduled status with a satisfactory track record of performance for a minimum period of five years
• Shares of the bank should have been listed on a recognised stock exchange
• Having a minimum net worth of Rs 1,000 crore as at the end of the previous quarter (audited)
• Meeting the prescribed CRAR requirements for SFBs
• Having a net profit in the last two financial years
• Having gross non performing assets (GNPA) and net non performing assets (NNPA) of less than or equal to 3% and 1% respectively in the last two financial years.

Here are important FAQs on Universal Bank licences, according to the AU Small Finance Bank website

What does AU Small Finance Bank’s transition into a universal bank mean for me as a customer?

AU has received an in-principle approval from the Reserve Bank of India (RBI) to become a universal bank. For you as a customer, it means that India’s central bank recognizes our strong performance, governance, and service track record.

How will this transformation impact the products and services I currently use?

There will be no disruption to your current products or services. We already have a full suite of retail and business banking products like savings accounts, current accounts, deposits, loans, investments, insurance, credit cards, forex services, wealth solutions and more.

Will there be any changes in how I access my accounts, either through online banking or physical branches?
None at all. You can continue using AU 0101 app, internet banking, WhatsApp banking, and physical branches exactly as you do today. All access points remain unchanged.

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Will I need to update my debit/credit cards, cheque books, or account numbers?

Not at all. Your current debit and credit cards, passbooks, cheque books, and account numbers remain valid and usable. No action is required on your part.

Will there be any changes to fees or charges associated with my existing accounts?

No changes are being made at this point. All existing fee structures remain as-is. If anything changes, you will be informed well in advance.

What makes AU eligible to become a Universal Bank?

AU meets all RBI criteria, including over five years of strong performance, profitability, high net worth, and a solid credit rating.

Is the brand’s name, logo, or ambassador changing?

Yes. With the upcoming transition, you will see a refreshed brand identity, including our logo and communication. These changes reflect our evolution while staying true to our founding values.