After successfully operating as a small finance bank, AU Finance will now function as Scheduled Commercial Bank, post acquiring Reserve Bank of India’s (RBI) approval.
The bank’s name has been listed in the Second Schedule of Reserve Bank of India Act, 1934.
After acquiring the status of the scheduled commercial bank, AU Small Finance Bank will now be able to lend and borrow with RBI under Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF).
It will also be able to handle business from public sector undertakings (PSUs), corporates, banks, mutual funds, insurance companies and other market participants that are allowed to transact with scheduled banks only, in adherence to the regulatory guidelines.
This certification will allow the bank to issue Certificate of Deposits (CDs) on competitive interest rates in the market to generate liquidity.
“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,” said Sanjay Agarwal, MD and CEO, AU Small Finance Bank.
After getting the approval from the RBI, the bank started operating as a small finance bank from April this year. The development will assist the bank to enhance its reach and broaden its future growth prospects, said the bank in its official communiqué.
As a Non-Banking Financial Company (NBFC), Au Financers holds more than 20 years of experience in banking the unbanked.
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