AU Small Finance Bank shares slip as market tumbles; RBI modifies promoter holding condition

Shares of AU Small Finance Bank fell in Monday’s trade, tracking weakness in the broader market and reacting to regulatory updates related to its transition into a universal bank.

AU Small Finance Bank share price

The stock declined 3.63 per cent to Rs 929.25. It opened at Rs 943.40 and slipped to an intraday low of Rs 926.10, after touching a high of Rs 948.30 earlier in the session. The bank’s market capitalisation stood at about Rs 69,460 crore. The stock has a 52-week high of Rs 1,039.20 and a low of Rs 478.35.

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The fall also came amid sharp weakness in the broader market, with the BSE Sensex plunging nearly 2,000 points during the session, which weighed on investor sentiment across banking and financial stocks.

RBI modifies NOFHC requirement

The Reserve Bank of India has exempted the promoters and promoter group of AU Small Finance Bank from the earlier requirement to hold their stake in the transitioned universal bank through a Non-Operative Financial Holding Company (NOFHC).

When RBI granted in-principle approval on 7 August 2025 for the bank’s transition from a small finance bank to a universal bank, it had stipulated that promoter shareholding must be routed through a NOFHC.

However, following a request from the bank, the central bank has now replaced that condition, the lender said in a regulatory filing.

Requirement applicable if new businesses are added

The requirement to set up a NOFHC will now apply only if the bank or its promoter group plans to establish any additional group entity in the future.

This means that if the bank or its promoters enter other financial services such as mutual funds or insurance after becoming a universal bank, they will have to create a NOFHC structure.

AU Small Finance Bank said it will submit its application for the final universal banking licence within the stipulated timelines and under the guidance of its board. The RBI’s in-principle approval for the transition remains valid for 18 months.

The lender is the first small finance bank to receive RBI’s in-principle approval to convert into a universal bank.

Deposits and profit show strong growth

For the quarter ended 31 December 2025, the bank reported steady growth in business.

Total deposits rose 23.3 per cent year-on-year to Rs 1,38,415 crore, while advances increased 19.3 per cent to Rs 1,29,898 crore.

Net profit climbed about 26 per cent year-on-year to around Rs 668 crore, supported by strong growth in core income.

Net interest income grew 26.3 per cent to Rs 2,341.3 crore. Asset quality improved slightly, with gross NPAs easing to 2.30 per cent from 2.41 per cent sequentially, while net NPAs remained stable at 0.88 per cent.