AU Small Finance Bank shares closed at ₹736.95 on the NSE as of 3:30 PM on August 8
This is the edited excerpt of the interview.A: Never imagined when I started 30 years back, that we will get to this level. The credit goes to the Government of India, RBI, customers, the board, my employees, my friends, family, what a journey. I wish I can be in that zone forever. To be precise, we are already a bank, and we are doing as a bank, lot many things raising money, lending money. So much not will be changed immediately. This approval is in principle, will take some time to really become universal. We have to do some formalities around our structure.
I would say the momentum will be so strong in our favour, because if the validation has done by the regulator, then there is lot, much curiosity around people that what is AU, what they do. It will be lot, much easier working for us. I believe we can have a better growth numbers this year too.
We can look for a better cost of money in immediate also, because if people start believing in you, they can park the money with us. We were giving them little higher rates in comparison to our mid-size banks. So that can also be addressed. Slowly, the whole benefit will come. But the immediate focus is on to really do that transition in terms of universal bank.
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Q: The transition period that you have been given, this 18 month period that you spoke about, why has the regulator, to begin with, asked you to transfer the entire promoter stakeholder of 22% to this non operative financial holding company structure?
A: We just got the approval last night, so we haven’t got in touch with the regulator as of now that what is the reason behind it? But I would say on the face of it, that it benefits me personally, because my structure around holding is with me, my personal name and my family name, which is not that great, in my opinion, because it does not free me up. The structure is quite progressive, in my opinion. But the only challenge would be that how my whole tax angle will play out. Let me figure out. But for me, whatever regulator asked me, I will do that, because we have an attitude of bank first, organisation first.
Q: Your current shareholding at a little over 22% you have had room to take it up to 26% is that something, if not immediately, in the near term, you would look at increasing your stake?
A: I am good enough, there’s no plan to increase my stake.
Q: You said immediately some of the benefits, of course, will come from the stronger brand. But you get this avenue to expand your diversify your loan book as well, corporate, for instance, something you could do more of PSL will come down from 60 to 40% give us a sense of what au bank will look like in three to five years from now?
A: I would say that corporate finance is not in our immediate agenda, because the corporate finance meet a lower lending rates. We need to figure out our cost of money first has to go down. We are close to 7%, our mid-size bank, which is close to our size, is around 6%. So 100 basis point we need to come down first which will not be easy so much. We need to really work hard to get to that level. The focus would be more on that first,
Second, I would say that in next three to five years, ideally, I want to be in retail only because there is not much scope in space available. Idea is to remain competitive to NBFCs for lending.
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