AU Small Finance Bank will not be required to set up a non-operative financial holding company (NOFHC) as a pre-condition to transition into a universal bank after the Reserve Bank of India (RBI) relaxed an earlier stipulation attached to its in-principle approval.
In a regulatory filing on Saturday, the lender said the central bank has replaced the earlier condition that required the promoter shareholding in the transitioned universal bank to be held through a non-operative financial holding company.
Under the revised stipulation, the requirement to create an NOFHC will arise only if the bank or its promoter group proposes to establish any additional financial services entity in the future, such as in businesses like mutual funds or insurance. The change follows a request made by the bank to the regulator, according to the filing.
The Jaipur-headquartered small finance bank had received an in-principle approval on August 7, 2025 to transition to a universal bank. The RBI approval is valid for a period of 18 months. The small finance bank said that it would submit its application for the final universal banking licence within the stipulated timeline and under the board’s guidance.
“Grant of the final license shall remain subject to RBI’s assessment of the bank’s compliance with applicable regulatory guidelines and instructions,” the filing said.