RBI allows Temasek subsidiary to raise stake in AU Small Finance Bank

Zulia Investments holds 1.37% stake in India's largest small finance bank

The Reserve Bank of India (RBI) has given its approval to Zulia Investments, a unit of Temasek Holdings, to raise its stake in AU Small Finance Bank to up to 7 per cent, the lender told exchanges on Thursday.

 

Zulia holds a 1.37 per cent stake in AU, the largest small finance bank in the country. Foreign portfolio investors and foreign institutional investors hold 39.35 per cent stake in the bank, according to exchange data. Zulia, an indirect wholly owned subsidiary of Temasek, can raise its stake through paid-up share capital or voting rights in the bank within one year from the date of RBI approval.

 

AU Small Finance Bank facilitates credit to retail and micro, small and medium enterprises and provides solutions to its deposit and branch banking customers. The Jaipur-based lender has 2,400 banking touch points in 21 states and four union territories and an employee base of 49,000.

 

In the third quarter of Financial Year 2024-25, the bank had a deposit base of Rs 1.12 trillion, loan portfolio of Rs 1.08 trillion and an overall balance sheet of Rs 1.43 trillion.

 

In September, the bank submitted its application to the RBI to transition into a universal bank. AU Small Finance Bank started operations in April 2017.

 

According to RBI guidelines, small finance banks’ intending to convert into a universal bank must have a minimum net worth of Rs 1,000 crore and a scheduled status with a satisfactory track record of at least five years. They should also have been profitable, with gross non-performing assets of less than 3 per cent and net non-performing assets of less than 1 per cent in the previous two financial years. They must also meet the prescribed capital adequacy requirements and provide a detailed rationale for their transition.