mumbai, Aug. 8 -- AU Small Finance Bank on Thursday won the Reserve Bank of India's 'in-principle' approval to upgrade to a universal bank, becoming the first lender to secure a full-fledged banking licence in 10 years. An in-principle approval gives the bank time to meet several conditions before it is granted a final licence. The approval crowns a three-decade journey for AU, which started as a vehicle financier in 1996, and turned a small finance bank (SFB) in 2017. The bank management expressed delight at the approval, calling it a moment that will go down in India's banking history. "This milestone is a reaffirmation of our purpose, perseverance, and passion," Sanjay Agarwal, founder, MD and CEO, said in a statement. In its guidelines that paved the way for SFB licences in 2014, RBI had set out a transition path for such banks to become universal banks. This was subject to SFBs fulfilling minimum norms around paid-up capital, track record of performance, and the regulator's due diligence. In 2024, RBI laid out the eligibility criteria for SFBs to transition to universal banks. It said that only listed SFBs can qualify for a universal banking licence. Those intending to convert must have a minimum net worth of Rs.1,000 crore, a "satisfactory track record" of at least five years, and a net profit in the last two financial years. The last winners of banking licences in India were Bandhan Bank and IDFC Bank (now IDFC First Bank) in 2015. AU Small Finance Bank, now India's largest SFB, started its journey as a bank in April 2017. It had submitted its application on 3 September last year under the RBI's licensing guidelines and the framework for the voluntary conversion to universal banks. Meanwhile, Ujjivan Small Finance Bank's application submitted in February and Jana Small Finance Bank's in June are pending with the RBI. Conceptualized by a committee headed by former RBI board member Nachiket Mor, SFBs are supposed to undertake basic banking activities like accepting deposits and lending....