RBI removes NOFHC requirement for AU SFB's transition to Universal Bank

New Delhi, Mar 7, 2026

Instead, the regulator now said the NOFHC structure will be required only if the bank or its promoter proposes to establish any group entity in the future

AU Small Finance Bank on Saturday said the Reserve Bank of India (RBI) accepted the bank’s request to allow it to transition into a universal bank without requiring the promoters to park their stake in a Non-Operative Financial Holding Company (NOFHC), one of the conditions the regulator had earlier set for the transition.

Instead, the regulator now said the NOFHC structure will be required only if the bank or its promoter proposes to establish any group entity in the future.

Currently, the bank’s promoters, Sanjay Agarwal and family, along with Mys Holdings, own nearly 23 per cent stake in the bank. Agarwal is also the bank’s MD & CEO.

“As part of the in-principle approval, RBI had stipulated that the shareholding of the promoters/promoter group in the transitioned ‘universal bank’ be held through a NOFHC,” the bank said in an exchange filing, adding that RBI has now replaced this stipulation.

“This requirement for NOFHC will now be applicable to the transitioned Universal Bank if the Bank or its promoter (including promoter group) proposes to establish any group entity in the future,” the bank stated.

AU SFB received RBI’s in-principle nod to transition into a ‘Universal Bank’ last August, becoming the first SFB to receive RBI’s nod. The regulator has given the bank 18 months to transition into a universal bank.

“The Bank will submit its application for the final Universal Banking license in line with RBI’s letter dated August 7, 2025, conveying its in-principle approval for transition, under the guidance of its Board and within the stipulated timelines,” the bank said, adding that grant of the final license shall remain subject to RBI’s assessment of the Bank’s compliance with applicable regulatory guidelines and instructions.

[The Business Standard]