India’s AU Small Finance eyes universal bank licence at home

India’s AU Small Finance Bank has applied to the Reserve Bank of India (RBI) for a universal bank licence, the lender announced on Tuesday. The move comes after the central bank outlined in April a set of criteria for small lenders needed to meet to become universal banks.

The RBI’s set of criteria included a five-year track record of satisfactory performance, a net worth of 10 billion rupees ($119.6 million), meeting capital requirements, recent profitability and limited non-performing assets.

Obtaining a universal bank licence would allow AU Small Finance Bank to expand its operations beyond its current limitations, such as a smaller customer base and restrictions on loan sizes and subsidiaries.

In the quarter ending June 30, the bank reported a 30 per cent increase in net profit year-over-year to 5.03 billion rupees. Its gross bad loans remained relatively low at 1.78 per cent of total loans compared to 1.76 per cent a year earlier.