The Reserve Bank of India (RBI) has granted in-principle approval to AU Small Finance Bank for a universal banking license. With this approval, the bank will now be able to operate as a full-service bank and offer all banking services like larger banks. This permission has been granted to a Small Finance Bank after nearly a decade, giving a new dimension to AU Bank's expansion and competitive capabilities.
Universal Banking License: On August 8, 2025, the Reserve Bank of India gave in-principle approval to Jaipur-based AU Small Finance Bank to become a universal bank. Following this decision, the bank will now have the authority to provide all types of banking services like large commercial banks. This means the bank can now also provide loans to large companies, start new ventures, and expand its operations and reach across the country. AU Bank had filed this application in September 2024, and by June 2025, its customer base had exceeded 11.5 million.
AU Small Finance Bank's Journey So Far
AU Small Finance Bank started as a Non-Banking Finance Company (NBFC) in 1996. In 2015, it received a Small Finance Bank license, and in 2017, it commenced banking operations. As of June 2025, the bank's network spanned 21 states and 4 union territories, with over 2500 banking centers. Its workforce exceeds 53,000, and the number of customers has surpassed 11.5 million.
The bank applied for a universal banking license in September 2024, making it clear that it now aspires to stand in the ranks of the country's leading commercial banks.
What is a Universal Banking License?
A universal banking license is the approval that allows a bank to conduct full commercial banking operations across the country. This means the bank will no longer be limited to providing small loans within a restricted scope, but will also be able to offer large loans, international transactions, investment services, insurance, and other financial services.
AU Small Finance Bank will now be able to offer customers a full range of services, including current accounts, savings accounts, fixed deposits, corporate loans, foreign exchange trading, and other diverse banking products.
RBI's Conditions
In April 2024, the Reserve Bank of India issued detailed guidelines for Small Finance Banks to convert into Universal Banks. According to these guidelines, a bank must demonstrate at least 5 years of satisfactory performance, a net worth of ₹10,000 crore, recent profitability, limited NPAs, and b corporate governance to become a Universal Bank.
AU Bank has met all these standards to obtain this approval. This also means that the RBI has found the bank's financial position, customer service, and risk management standards to be satisfactory.
A New Beginning in the Banking Sector
AU Bank's receipt of a universal banking license could initiate new competition in the banking sector. The bank will now be able to expand across the country like banks such as HDFC, ICICI, and SBI, and also serve corporate clients.
The bank already has a b presence in rural and semi-urban areas, enabling it to provide services on a large scale through its existing network. Additionally, the bank's special emphasis on digital banking and technology is considered its greatest strength.
Previous Example: Bandhan Bank
Prior to AU, such a license was granted to Kolkata's Bandhan Bank in 2015. Bandhan was previously a microfinance institution and then became a universal bank. It was India's first Small Finance Bank to achieve this status.
AU's promotion has been granted to a bank after almost a decade, which demonstrates that this is no ordinary achievement. It reflects the success of the bank's operations, transparency, and long-term strategy.
