India's AU Small Finance Bank , on Thursday, got the banking regulator's 'in-principle' approval to transition into a universal bank, making it the first full-fledged banking licence issued in nearly a decade.

AU Small Finance Bank applied for the licence in September 2024, which would allow it to expand its operations, in terms of issuing bigger loans

Turning a small finance bank into a universal bank marks a major step towards growth and diversification in the banking sector. With this status, SFBs can go beyond their current offerings and provide a wider range of services,

The Reserve Bank of India (RBI) on August 7 gave 'in-principle' approval to AU Small Finance Banks to convert from a small finance bank to a universal bank. On September 3, 2024, AU Small Finance Bank has applied to the RBI for voluntary conversion from a small finance bank to a universal bank.

RBI has granted AU Small Finance Bank in-principle approval to transition into a universal bank, marking the first such approval in a decade. Founded as an NBFC in 1996, AU became the largest SFB and the first to seek universal status under RBI's new framework.

The approval came after market hours on Thursday and has been granted under RBI's process for small finance banks to graduate to universal bank status, issued in April 2024. Typically, the in-principle approval is valid for 18 months.

AU Small Finance Bank will be in focus as it receives RBI's in-principle approval to transition from a Small Finance Bank to a Universal Bank, marking a historic milestone in its journey since 2017.