Jaipur-based AU Small Finance Bank has submitted an application to the Reserve Bank of India (RBI) to voluntarily convert itself to a universal bank.

The move will allow the leading small finance bank (SFB) to expand its reach and services.

"We wish to inform that the bank has submitted an application to the RBI to seek approval for voluntary transition from a small finance bank to universal bank today (3 September)," the bank said in an exchange filing on Tuesday.

AU is the first SFB to seek regulatory approval for the transition. Ujjivan Small Finance Bank is the only other SFB to meet the eligibility criteria.

On 26 April, the RBI invited applications from small finance banks meeting eligibility, including a minimum net worth of Rs 1,000 crore, for becoming regular or universal banks. 

AU SFB meets all the criteria laid down by the RBI to transition itself into a full-fledged bank. Only listed SFBs having a minimum net worth of Rs 1,000 crore and a scheduled status with a satisfactory track record of at least five years can qualify for a universal banking licence. They should also have been profitable, with gross non-performing assets (NPAs) of less than 3% and net NPAs of less than 1%, respectively, in the previous two financial years. They must meet the prescribed capital adequacy requirements and provide a detailed rationale for their transition.

In July, AU SFB said they would apply for the universal banking licence in about four weeks. Its board approved the plan on 25 July. 

For the fiscal first quarter ended 30 June, AU SFB reported a 30% jump in its net profit to Rs 502 crore compared to Rs 387 crore a year ago. The gross NPA as a percentage of total loans was 1.78% in the June quarter versus 1.67% in the preceding quarter. Total deposits grew to Rs 97,290 crore from Rs 69,315 crore a year ago, while advances rose to Rs 90,702 crore from Rs 63,635 crore.