Latest news with #SanjayAgarwal
India.com
a day ago
- Business
- India.com
Meet Sanjay Agarwal, brain behind AU Small Finance Bank, India's biggest..., his net worth is Rs...
Sanjay Agarwal (File) Building a successful banking venture is not as an easy task for finance entrepreneurs, especially in India, where the banking sector is dominated by large banks owned by giant corporations and the state. However, Sanjay Agarwal, the man who recently got the nod from RBI for India's newest universal bank, not only built a small yet successful small finance venture, but transformed it into the country's biggest Small Finance Bank (SFB). Who is Sanjay Agarwal? Born in Rajasthan, Sanjay Agarwal earned a Bachelors Degree in Commerce from Government College, Ajmer, and later aced the CA exam from the from the Institute of Chartered Accountants of India, to become a Chartered Accountant. Agarwal's academic excellence was recognized by the institute, who awarded him a gold medal for his topping the CA exam in 1995. After acing the CA exam, Sanjay Agarwal, instead of joining some major finance firm, decided to launch his own finance venture which would cater to the financial needs of people living in Rajasthan's rural and semi-urban areas, where banking facilities were unavailable at the time. How AU Small Finance Bank was born? In 1996, a year after he cleared the CA exam, Sanjay Agarwal launched Au Financiers, small finance venture aimed at catering to unbanked rural and semi-urban population in Rajasthan. Over the years, Au Financiers, which began as a humble vehicle finance firm, grew into the AU mall Finance Bank (SFB), the largest small finance bank in India. Sanjay Agarwal currently serves as the Managing Director and CEO of the AU Small Finance Bank, and was honored with the 2018 Ernst & Young Entrepreneur of the Year Award for his contribution in the banking and finance sector. India's newest commercial bank Under Sanjay Agarwal's leadership, AU Small Finance Bank has now transitioned into a full-service commercial bank after receiving 'in-principle' approval from the Reserve Bank of India on August 7, 2025– the first in almost a decade– to become a Universal Bank. Bandhan Bank was the last financial institution to receive this approval from RBI in 2015. AU SFB's transition into a full-fledged universal bank is a nod to the years of dedicated growth and trust the institution has built under the leadership of Sanjay Agarwal. Sanjay Agarwal net worth According to Forbes, Sanjay Agarwal has a net worth of $1.3 billion (about Rs 11,500 crore), making him one of the wealthiest individuals in India.
Mint
3 days ago
- Business
- Mint
AU Small Finance Bank has to fulfil one precondition to become universal lender
Mumbai: Having received the Reserve Bank of India's (RBI) in-principle approval to transition to a universal bank,AU Small Finance Bank Ltd's founder and managing director Sanjay Agarwal said the lender's next focus will be creating a holding company and rebranding. 'My shareholding has to be shifted to the NoFHC structure, where we need to figure out the process and the modalities," Agarwal said. 'We just got it (the approval) last night, so it takes some time, but it should not be so complex in my opinion. Also, we need to change our name from AU Small Finance Bank Limited to AU Bank Limited." A non-operating financial holding company (NoFHC), a precondition for becoming a full-service bank, is a regulatory requirement that ensures lenders are managed independently without conflict of interests. RBI has given AU Small Finance Bank 18 months to set up the holding company. 'The universal tag, we'll only get when we do all these things. It will not be universal from tomorrow. What we need to do and how it will be done, it will be discussed with the regulators," he told Mint on the sidelines of an event to announce the RBI approval. While this will have tax implications, there is a provision allowing a dispensation for such regulator-mandated company structures, Agarwal said, adding that the bank will discuss with RBI to figure out the transition, as a universal bank licence has not been granted in over a decade. 'We need to rewind that whole process and see how it can be done," he said. 'But on the face of it, it is a more pragmatic and progressive structure where they safeguard the bank's interest as well as the promoter's interest." Agarwal said he has no plans to venture into other areas of business until he heads the bank, but could consider other financial services after retirement. 'Till I remain a CEO of a bank, there is no other plan. I want to completely focus on this franchise. Of course, post my retirement (I might look at it). The bank can do a lot many things, but at my personal level, I will only do once I get free from the bank," he said. Agarwal has headed the Jaipur-based small finance bank for eight years since it started its journey in 2017, transitioning from the original company Au Financiers established in 1996. RBI has capped the tenure of private sector bank heads at a maximum of 15 years. Agarwal said while he will 'make his case" with the RBI for a full 15-year tenure, he is unlikely to get it. 'I will apply for it that way, that you should give me my 15 years from the date of universal (bank licence). I will push my case," Agarwal quipped at the conference. 'But if you ask me, in spirit I am already in the eighth year as MD and my tenure of 15 years should complete by 2032 on the universal bank platform. I don't expect that RBI will be giving me another 15 years." Perception change The biggest advantage Agarwal sees coming from the universal bank tag is the change in customer perception as most people still do not completelytrust a 'small finance bank' or understand how it works differently than a universal bank. 'SFB, as such, is a brilliant model because they allowed people like us to transit from NBFC (non-banking financial company) to SFB. But I think in the longer run, it is difficult to explain to the public at large what 'small finance' means and whether you are allowed to take deposits and you are a normal bank or whether it is a safe bank," he said. Deposit mobilization at lower or competitive rates has been the biggest challenge for small finance banks, given that their rates are around 100 basis points higher than universal peers. 'If you can establish that you are more secure, people can also trust you more, and you can build a brand and retail deposits at lower cost, then your sustainability is cemented. We need to work on those parameters now," he said. Lower cost of funds Agarwal said the bank aims to bring the cost of funds below the prevailing repo rate in the next five years. Cost of funds for the lender decreased to 7.08% in first quarter of FY26 from 7.14% in the previous quarter. Cognizant of the fact that the bank has to grow its unsecured loan book, Agarwal said the focus will be more on segments such as personal loans and credit cards 'in a more measured manner", given some asset quality stress seen in these segments over the past year. 'We have to increase our unsecured book portfolio, but the cap (on share of unsecured loans) we have maintained as of now is around 15% and right now we are around 8%," he said. Unsecured loans typically attract higher rates of interest owing to the lack of collateral offered by the borrower and the higher risk for the lender. AU, despite operating largely in secured loan segments so far, has a relatively higher yieldon advances–what the bank effectively earns on loans–compared with peers, due to the customer segments it operates in. But this will normalize to an extent as the portfolio grows, Agarwal said. Yield on gross advances declined by 27 basis points to 14.1% in Q1 FY26 from 14.4% in the prior three months. 'My cost of money will go down, my yield will go down. That's why my growth will happen. Over the period of time, I believe that our NIM (net interest margin) should be well protected because of this whole balancing around cost of money and the yield," he said, adding that in the longer run, the aim will be to maintain return on assets of around 2%. NIM for the last reporting quarter was at 5.4% compared with 6.0% a year earlier. Asked if he is feeling the pressure of competing with larger banks after becoming a universal lender, Agarwal said in the conference that the business model of pricing deposits at higher rates and lending at higher rates puts it against NBFCs more than banks. 'I think honestly, for them we are threatening," he said, adding that given the choice, AU would want to use the universal bank license to make the loan pricing more competitive and keep operating in these markets, which give a higher yield and allow secured lending. 'Our competition is more with NBFCs than a bank…so ideally I want to be in this market till this (model) allows me."
Time of India
3 days ago
- Business
- Time of India
RBI mandates AU Small Finance Bank promoter to shift stake for universal licence
AU Small Finance Bank will receive its final license to operate as a universal bank only after promoter Sanjay Agarwal transfers his entire 22% equity stake into a separate holding company. The bank has 18 months to complete this transition. The lender has become the first small finance bank to secure a universal banking license , a fresh one from RBI in almost 11 years. 'Converting the promoter's stake to a Non-operative Financial Holding Company (NOFHC) is a precondition for the license, as per the RBI's in-principle approval,' said Agarwal, MD, AU Small Finance Bank. 'I hold around 22% of the bank, so that entire holding needs to be in that structure. I feel that structure is far better for me because it allows me to experiment on the other side of financial services too.' Agarwal acknowledged there may be some tax implications from the conversion but expressed confidence in completing the transition ahead of schedule. 'We have 18 months, but it will happen sooner, and we will become universal,' he said. 'This license removes challenges for people on the ground and allows us to focus on business. It's a validation by a regulator like RBI and sends a strong message that this bank is safe.' Agarwal said the lender will continue to focus primarily on retail loans . He added that rather than competing directly with larger private sector banks, AU will operate in the NBFC space. 'I have been a retail asset guy all my life. We are good in retail finance, mortgage finance, personal loans, credit cards, and SME lending. We should stick to our strengths and look at corporate finance only when we have a larger balance sheet. It will be a gradual transformation,' he said. On concerns about concentration risk in Rajasthan, where nearly 30% of the bank's business originates—Agarwal said the share has been reducing steadily and will eventually fall to 15%. 'When we started, 80% of our business came from Rajasthan. That's now down to 30% in eight years. In the next ten years, AU will not have more than 15% exposure in any state,' he said. HR Khan, former deputy governor of the RBI and chairman of the bank, said reducing both product and geographic concentration remains a priority for the board. 'The board and the risk management committee have made this a top agenda. Over time, concentration in states where we had larger exposure has declined sharply. Today we operate in 21 states and four union territories,' Khan said. As of June 2025, AU Small Finance Bank had a deposit base of Rs 1.27 lakh crore, an asset base of Rs 1.17 lakh crore, and a total balance sheet size of Rs 1.62 lakh crore.
News18
3 days ago
- Business
- News18
RBI asks AU promoter to move holding to NOFHC for final nod as universal bank
Mumbai, Aug 8 (PTI) The Reserve Bank has asked AU Small Finance Bank promoters Sanjay Agarwal and family to move their holding to a non-operative financial holding company before it gives the nod to start working as a universal bank, officials said on Friday. Agarwal, the founder, managing director and chief executive of the lender, said that even as a universal bank, it will not compete with larger banks but with non-bank finance companies (NBFCs). AU SFB received in-principle approval to operate as a universal bank on Thursday, which will help it access funds at lower costs and also do big-ticket lending. 'I have been given 18 months to get the NOFHC (non-operative financial holding company) in place. Moving the holding into an NOFHC will allow greater flexibility for me to start other financial businesses like asset management or insurance, if we so desire," Agarwal told reporters here. When asked about the price for transferring the shares and the tax liability thereof, Agarwal said there are some mechanics which need to be sorted out in this journey and added that he would like to do it before the 18-month deadline. A senior financial sector official said there is some communication between the central bank and the government over the need for some relief on taxation for such transactions. Explaining the insistence on creating NOFHC, AU's non-executive chairman, HR Khan, a career central banker who served as the Deputy Governor of the RBI, said this is a way to ring fence the bank from any potential troubles so that depositors' money is protected. AU's deputy chief executive and executive director Uttam Tibrewal recalled that the RBI had, in 2016, come out with a regulation on the NOFHC-based sectors and added that all universal banks of the future will have to follow this. Agarwal said he is not interested in hiking his stake in the 1996-incorporated venture beyond the current 22 per cent. Starting as a direct selling agent in 1996, AU transitioned to being a non-bank lender, became an SFB later and finally secured the in-principle nod to operate as a universal bank, the first entity in over a decade to be selected to be one. Agarwal said even as a universal bank, it is not keen to explore big-ticket lending and would rather focus on the smaller-ticket retail loans segment itself, which forms 80 per cent of its Rs 1.17 lakh loan book at present. There will not be any change in business strategies for the next three to five years at least, he said, adding that the bank will come out in a newer avatar to people from April 2027. It will drop the SFB mention from the branding to operate as 'AU Bank" when it starts the journey as a universal lender, Agarwal said, adding that the small finance bank mention makes people wary. PTI AA BAL BAL view comments First Published: August 08, 2025, 20:00 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Time of India
3 days ago
- Business
- Time of India
AU Small Finance Bank to be held by holding company, corporate office in Mumbai
Mumbai: AU Small Finance Bank (AU SFB) promoters will transfer their shares to a non-operative holding company (NOHC) as part of the Reserve Bank of India's conditions for the lender's transition into a universal bank. The bank has also decided to shift its corporate headquarters from Jaipur to Mumbai, after receiving in-principle approval from RBI for the upgrade. Founder, MD & CEO Sanjay Agarwal said the NOHC structure would work in his favour, as it would allow him to expand into other areas of financial services in the future. 'That structure is far better for me because it allows me to experiment on the other financial services too'. He added that even if there were tax issues in transferring the holding they should be manageable. Agarwal said the requirement to move to an NOHC was conveyed only with the in-principle approval for conversion to a universal bank which came in the previous night. He added that he was content with his current 22% stake in the bank and was not inclined to raise it to the 26% permitted under RBI rules. He added that the universal bank would retain the AU name. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like No annual fees for life UnionBank Credit Card Apply Now Undo The bank has been given 18 months to complete the transition to a universal bank, a deadline that coincides with its 10th anniversary in March 2027. 'March 27th is our 10th year of working… maybe after this 10 years, which is April 2027, you will see even a new AU,' Agarwal said. Over the next year and a half, the bank will retain its focus on retail lending — defined by RBI as loans up to Rs 5 crore — which currently makes up around 80% of its Rs 1.2 lakh crore book. Products in this category include vehicle loans, affordable housing, small business loans and gold loans, with about half of its business banking portfolio also falling within the retail definition. Agarwal said the bank would continue targeting markets underserved by large banks, positioning itself in segments where its cost of funds can be competitive and yields are attractive. 'We want to really give a tough time to NBFCs to be honest… nothing stops us from there,' he decision to move the headquarters to Mumbai is part of strengthening the bank's pan-India presence. Agarwal noted that 90% of the leadership team had already shifted from Jaipur, and the bank recently purchased a building in Bandra Kurla Complex to house its head office. 'In 30 years we are having a BKC building… I want to build a universal bank there,' he said. Stay informed with the latest business news, updates on bank holidays , public holidays , current gold rate and silver price .
