This SFB gets Universal Bank license! 2 Global Brokerages Bullish, BUY rating for up to 31.5% returns

AU Small Finance Bank has received in-principle approval from the Reserve Bank of India (RBI) to become a universal bank. AU has become India’s first small finance bank (SFB) to get approval to become a universal bank. After getting the license of universal bank, global brokerage Morgan Stanley and Goldman Sachs have given BUY rating on AUBANK.

Universal Bank Approval

According to the RBI notification, AUBANK will now start working towards fulfilling the regulatory and operational conditions required to complete its transformation process. The application for this was submitted on 3 September 2024, under RBI’s ‘On Tap’ licensing guidelines (August 2016) and April 2024 framework for voluntarily converting a small finance bank into a universal bank.

Benefits of becoming a universal bank from a small one

• CAR: Capital adequacy ratio may go below 15%, growth capital will increase
• Exposure of priority sector lending reduced from 60% to 40%
• Lending mix will improve due to reduction in PSL
• The bank will be able to provide big loans, corporate banking, wealth management and forex services
• Will be able to form insurance, asset subsidiary
• Credit rating will improve, raising loans will be easier
• Confidence will increase in the governance and operation track record of the bank
• AU Small Finance Bank Share Price Target

Goldman Sachs: Maintain Buy, Target- ₹979

Global brokerage Goldman Sachs has maintained a BUY rating on AU Small Finance Bank (AUBANK). The target per share is Rs 979. The closing price of the stock on August 7 is ₹744. From this price, the stock can see an upside of up to 31.5 percent. The brokerage says that the Universal Banking License provides security to strategic options. It will enable AU to reach more customers and reflects confidence in its corporate governance and operational track record.

Morgan Stanley: Maintain Overweight, Target- ₹860

At the same time, global brokerage Morgan Stanley has maintained an overweight rating on AU Small Finance Bank. The target per share is ₹860. It can see an upside of 15.60 percent from Thursday’s closing price.

The brokerage said, RBI has given in-principle approval for universal banking license, this is a big positive step. This will help AU Bank to increase its brand visibility, further strengthen the liability franchise and maintain strong growth. This license will give AU Bank an opportunity to diversify its products, expand its customer base and expand in geographic rich.

AU Small Finance Bank Share Price History

After getting the universal banking license from RBI, AUBANK’s stock rose sharply on Friday (August 8). The stock rose 7.5 percent to Rs 800 on BSE. If we look at the stock performance, it has increased by 3.66% in 2 weeks, 10.26% in 3 months and 28.38% in 6 months. Whereas in the last one month, it has seen a correction of 7.20%.

However, the stock has gained 33.72% so far this year. It has climbed 21.50% in the last one year. The 52-week high of the stock is Rs 840.95, which it made on July 2, 2025. At the same time, the 52-week low is Rs 479, which it made on March 18, 2025.

About AU Small Finance Bank

AU Small Finance Bank Limited (AU SFB) is a scheduled commercial bank and has established itself as India’s largest small finance bank since starting its banking journey in April 2017. Founded in 1996 by Sanjay Agarwal, AU SFB is entering its 30th year of operations with a deep-rooted legacy of service. It has completed more than 8 years as a bank. Over three decades, it has evolved into a stable and inclusive financial institution that empowers underprivileged and under-served communities through a strong retail banking model. AU has received in-principle approval from the Reserve Bank of India (RBI) to convert into a universal bank.

Frequently Asked Questions- FAQs

Q1. What approval has AU Small Finance Bank received from RBI?

Ans: The Reserve Bank of India (RBI) has given in-principle approval to convert AU Small Finance Bank into a universal bank.

Q2. What will be the benefit of AU Bank becoming a universal bank?

Ans: Capital Adequacy Ratio (CAR) may go below 15%, which will increase growth capital, Priority Sector Lending (PSL) exposure will decrease from 60% to 40% and the bank’s credit rating will improve and it will be easier to raise loans.

Q3. Should AU Bank shares be bought now?

Ans: Two global brokerages Goldman Sachs and Morgan Stanley have given BUY or Overweight rating on AU Bank.

Q4. How has been the recent performance of AU Bank stock?

Ans: The stock has given a return of 10 percent in 3 months and more than 28 percent in 6 months.