AU Small Finance gets scheduled commercial bank status

AU Small Finance Bank has received Reserved Bank of India (RBI) approval to operate as Scheduled Commercial Bank. This bank’s name has now been included in the Second Schedule of Reserve Bank of India Act, 1934.

Post acquiring scheduled commercial bank status, AU Small Finance Bank will be able to do borrowing and lending with RBI under Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF) .

Also, it will help AU Small Finance Bank to acquire business from public sector undertakings (PSUs), corporates, banks, mutual funds, insurance companies and other market participants which can transact with scheduled banks only to comply either regulatory or internal guidelines.

It will also enable AU Small Finance Bank to issue Certificate of Deposits (CDs) on competitive interest rates in market to get liquidity.

Commenting on the development, Sanjay Agarwal, MD & CEO, AU Small Finance Bank said, “We are extremely thankful to the central bank for extending Schedule Commercial Bank status to us. It will significantly help us to broaden our liabilities and treasury operations and shall provide more liquidity avenues. It will also help AU Small Finance to widen its market perspective in terms of government business and acquire liability business at relatively lower costs.”

AU Small Finance Bank started its banking operation from April 19 this year. The development will not only widen the reach for AU Bank’s services and liability capabilities but also influence its growth prospects in future, a statement issued by the bank said..

Prior to becoming a bank, as Au Financiers (India) Ltd (an Asset Finance NBFC), the company had gained over 20 years of experience in financing the unbanked and underbanked segment in rural and semi urban areas.

Source:-.thehindubusinessline