Sanjay Agarwal, Managing Director and Chief Executive Officer, AU Small Finance Bank
AU Small Finance Bank (AU SFB) will transfer its promoter and promoter group’s shareholding — currently at nearly 23 per cent -into a Non-Operative Financial Holding Company (NOFHC), as part of its transition into a universal bank, MD & CEO Sanjay Agarwal told reporters here on Friday.
“The Reserve Bank of India (RBI) has given us 18 months to complete this transition,” he said. The SFB on July 7 became the first lender in its category to receive the RBI’s in-principle approval for transition to a universal bank regime. The bank has been asked to transfer the promoter’s shareholding into NOFHC, as part of the in-principle approval extended by the regulator.
Lower cost of funds
Agarwal said the immediate benefit that the SFB sees from the RBI’s in-principle approval would be lower cost of funds.
“We believe that this licence will push our business momentum more, specially (helping bank) raising funds at a cheaper cost which will help us serve customers better. I don’t think that our business model will undergo tremendous change over 3-5 years…,” he said.
The problem with having a “small finance bank” tag, Agarwal said, was that the “unnecessary discussions” which employees were forced to have with customers. As a SFB, customers frequently asked bank employees that whether it is a co-operative bank, does it accept large deposits, how secured is the bank and is it as good as other banks.
“That unnecessary discussion was too much for my people to handle on the ground. I think this license will take away all challenges for people on ground and you can focus on business itself. If you get validation from regulator like RBI, it sends strong message to public that this bank is safe enough,” Agarwal said.
AU SFB’s Chairman HR Khan said that even after the conversion into an universal bank, the lender would continue to have a retail franchise.
Published on August 8, 2025
