AU Small Finance Bank has received government approval to sell a majority stake to foreign investors.
The Finance Ministry has cleared an increase in the bank’s foreign investment limit to the maximum permitted 74%.
FDI in private banks is automatic up to 49%, while any increase up to 74% requires government approval.
AU Small Finance Bank Gets Nod to Raise FDI Cap to 74%, Stock Hits 52-Week High
The Department of Financial Services under the Ministry of Finance has approved increasing the bank’s foreign investment limit from the existing 49% to the maximum permissible 74% of its paid-up capital, the Jaipur-based bank said in an exchange filing
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AU Small Finance Bank on Wednesday announced that it has received the government’s approval to sell a majority of its stake to foreign investors. Following the update, its shares rose to a 52-week high on NSE.
The Department of Financial Services under the Ministry of Finance has approved increasing the bank’s foreign investment limit from the existing 49% to the maximum permissible 74% of its paid-up capital, the Jaipur-based bank said in an exchange filing.
Under current rules, foreign investment in private-sector banks is allowed automatically up to 49%, while proposals to raise the limit beyond 49% and up to 74% require government approval.
The approval, dated December 9, comes with conditions, including a requirement that any Foreign Direct Investment under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, must receive prior approval from the department.
The higher limit will give the bank additional headroom for foreign investment in line with the consolidated FDI policy and applicable rules.
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The approval has no validity period and does not involve any withdrawal, suspension, or corrective action.
At present, around 23% of AU Small Finance Bank’s shares are owned by the promoter and promoter group, while the remaining 77% are publicly held.
In a recent interview with Outlook Business, Managing Director & CEO Sanjay Agarwal said, “I’m not worried about succession. The market itself has an interest in ensuring continuity. Investors may place value on me today, but I’d rather they place it on the institution and its platform.”
AU Small Finance Bank received in-principle approval from Reserve Bank of India (RBI) on August 7, 2025 to transition from a Small Finance Bank into a Universal Bank. The bank had submitted its application for conversion on 3 September 2024, under RBI’s “on-tap” licensing guidelines.
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On Wednesday, during intraday trade, AU SFB’s shares rose 3.62% to touch ₹1,007.25 on the NSE. The stock later pared some gains, trading 2.24% higher at ₹993.60 at 2:24 pm.
It has gained about 5.36% in the last one week, 9.29% in one month and over 75% year to date.
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