If all banks are cricket players, AU Small Finance Bank is the M.S. Dhoni among them—dependable, understanding, accountable and honest,” says MD & CEO Sanjay Agarwal of his banking venture, which caters to small borrowers in under-banked and under-served geographies. “When I finished CA in 1995, job opportunities in and around Jaipur were not that high… I started this company for my own livelihood.” Twenty-six years on, it is one of the few small banks to have weathered the pandemic well: At `51,591 crore, its assets are almost twice as much as its nearest competitor and its ROCE is the highest among its peers at nearly 22 per cent—making it the Best Small Finance Bank in the BT-KPMG Best Banks Survey 2020-21.
But AU did not start out as a bank. It began its journey in 1996 from Jaipur as an NBFC. It was a partnership with HDFC Bank in 2003, where the private lender picked up AU as its channel partner for Rajasthan, that became a turning point. “I owe this bank to the HDFC Bank partnership,” says Agarwal. The five-year association ushered in money, patience, a corporate way of thinking, and the belief that they could build big, too, he says. “We copy HDFC Bank, to be very honest.”
AU offers vehicle loans and secured business loans (SBLs), which account for three-fourths of its `42,000-crore loan base. Home loans form a part of the remaining quarter of the asset base along with commercial banking, a small part of gold loans and a very small part of unsecured loans. In the next five years, he sees home loans occupying 20 per cent and the vehicle-SBL mix going down to 55-60 per cent.
Unlike microfinance institutions, many of which had to fold up their businesses during the pandemic, the global health crisis’s impact on AU has been limited, Agarwal says. But once things normalised, loan repayment started, he adds. “Our gross NPA was at a peak of 4.3 per cent, which has come down to 2.6 per cent in two quarters. This is a very strong recovery.”
AU is also fast embracing the future. A super app, ‘AU 0101’, video banking, credit cards and a UPI-based QR code are among its latest digital initiatives. In Q3FY22, a third of its savings accounts were opened digitally through the app and video banking. “You cannot live only in a physical world,” says Agarwal, who now has his sights set on making AU a pan-India bank in 15 years.
@SaysVidya