The Reserve Bank of India (RBI) has granted approval to Zulia Investments, a subsidiary of Temasek Holdings, to increase its stake in AU Small Finance Bank to up to 7%. This move highlights Temasek’s growing interest in India’s financial sector and AU Small Finance Bank’s rising prominence. The Jaipur-based bank is the largest small finance bank in India, serving retail, micro, small, and medium enterprises (MSMEs) with a strong presence across the country.
Key Highlights
RBI’s Approval for Zulia Investments
- Zulia Investments, an indirect wholly owned subsidiary of Temasek Holdings, currently holds 1.37% stake in AU Small Finance Bank.
- With RBI’s approval, Zulia can increase its stake up to 7% through paid-up share capital or voting rights.
- The stake acquisition must be completed within one year from the date of RBI’s approval.
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AU Small Finance Bank’s Position and Operations
- Largest small finance bank (SFB) in India, providing credit to retail, MSMEs, and deposit banking customers.
- Headquartered in Jaipur, it has a network of 2,400 banking touchpoints across 21 states and 4 union territories.
- Employee strength: 49,000.
Financial Performance (Q3 FY 2024-25)
- Deposit base: ₹1.12 trillion.
- Loan portfolio: ₹1.08 trillion.
- Overall balance sheet: ₹1.43 trillion.
AU Small Finance Bank’s Transition to a Universal Bank
- AU Small Finance Bank applied to RBI in September 2024 for conversion into a universal bank.
- RBI Guidelines for Transition,
- Minimum net worth of ₹1,000 crore.
- Scheduled status with at least five years of satisfactory performance.
- Profitability record, with Gross Non-Performing Assets (GNPAs) < 3% and Net Non-Performing Assets (NNPAs) < 1% in the last two financial years.
- Compliance with capital adequacy norms and submission of a detailed rationale for transition.
Summary/Static | Details |
Why in the news? | RBI Approves Temasek Unit’s Stake Hike in AU Small Finance Bank |
Approval Granted To | Zulia Investments (Temasek subsidiary) |
Current Stake in AU SFB |
1.37%
|
Approved Stake Increase |
Up to 7%
|
Timeframe for Stake Acquisition |
1 year from RBI’s approval
|
AU Small Finance Bank’s Presence |
2,400 touchpoints, 21 states, 4 UTs
|
Financials (Q3 FY25) |
₹1.12T deposits, ₹1.08T loans, ₹1.43T balance sheet
|
Transition to Universal Bank |
Applied in September 2024
|
RBI Guidelines for Transition |
₹1,000 Cr net worth, <3% GNPA, <1% NNPA, profitable for 5+ years
|