AU Small Finance Bank Limited is an Indian small finance bank based in Jaipur, India. It was founded as a vehicle finance company, AU Financiers (India) Ltd., in 1996 and converted to a small finance bank on 19 April 2017. AU Small Finance Bank serves low- and middle-income individuals and

Question

AU Small Finance Bank Limited is an Indian small finance bank based in Jaipur, India. It was founded as a vehicle finance company, AU Financiers (India) Ltd., in 1996 and converted to a small finance bank on 19 April 2017. AU Small Finance Bank serves low- and middle-income individuals and micro and small businesses that have limited or no access to formal banking and finance channels. The bank offers loans, deposits, and payment products and services. AU Small Finance Bank ranked 355 in the list of Fortune India 500 (2019) companies, with annual revenue of ₹3,410.87 crore and total assets of ₹31,198.68 crore. AU Bank enjoys a long-term credit rating of “AA-/Stable” from CRISIL Ratings, ICRA Ratings, India Ratings, and CARE Ratings. The company was founded by Sanjay Agarwal, the managing director and CEO of AU Small Finance Bank, as a private limited company, and was publicly listed in an IPO on 29 June 2017. A merit-holder Chartered Accountant and a first-generation entrepreneur, he holds approximately 28.5% stake in the bank. He is supported by a team of 23,486 employees. AU Small Finance Bank is listed on NSE and BSE with a market capitalization of approximately ₹37,942 crore. On its first day of trading, the stock rose 51% to become the most expensive bank in India based on price-to-book. In November 2017, the Reserve Bank of India added the bank to its schedule of commercial banks, further improving the bank's growth prospects by reducing the cost of short-term funds and improving its ability to provide services. Over the years, the bank has attracted marquee investors like IFC, Warburg Pincus, Temasek Holdings, Nomura, Kotak Mahindra MF, etc. Private equity companies that provided venture capital, including Warburg Pincus and International Finance Corporation, made partial exits for as much as nine times their original investment. Due to its history as a vehicle finance company, as of March 2018 almost all the loans made by AU Small Finance Bank were secured, unlike most small finance banks that have unsecured loans due to their background in microfinance. This provides lower yields than unsecured loans, so the bank has been particularly active in growing its deposits, as bank deposits have a lower cost than other sources of funds. It has also sought to diversify into savings products like deposits, payment/transaction banking, distribution of third-party products, and additional loan products, thereby positioning itself as a holistic financial products and services provider. As on 30 June 2021, AU Small Finance Bank's distribution network and 23,486 employees were spread across 15 states and two Union Territories, with over 2 million customers. The bank has operations in 15 states and two Union Territories, with Rajasthan, Gujarat, Maharashtra, and Madhya Pradesh being key states. It is one of the largest banks by number of locations in its home state of Rajasthan. How much approximate stake does the founder of AU Small Finance Bank have in AU Small Finance Bank?

Accepted Answer

28.5% stake. The passage states that Sanjay Agarwal holds approximately 28.5% stake in AU Small Finance Bank. Therefore, the correct answer is 28.5% stake. This is a direct factual recall question from banking awareness.

Solution

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