AU Small Finance Bank shares traded higher on Wednesday, Dec 10, climbing 2.19% to Rs 993.30 after the lender announced a key regulatory approval that could open the doors to significantly higher foreign investment.
On Tuesday (Dec 9), the bank said it has received approval from the Department of Financial Services, Ministry of Finance, allowing it to raise its foreign investment limit from 49% to the maximum permissible 74% of its paid-up capital. This marks a major step that enhances the bank’s ability to attract foreign capital.
The approval, dated December 9, 2025, comes with conditions — including that no Foreign Direct Investment (FDI), as defined under the FEMA (Non-debt Instruments) Rules, 2019, can be undertaken without prior approval from the Department of Financial Services.
According to the bank, the enhanced foreign investment ceiling will provide adequate headroom for overseas inflows through all permissible routes while staying compliant with FDI policy. The approval comes with no expiry period, making it valid indefinitely.
Under India’s FDI framework, private sector banks are allowed up to 74% foreign investment, with up to 49% via the automatic route and the remaining 25% through the government approval route.
Shares of AU Small Finance Bank reacted positively in early trade following the announcement, reflecting investor optimism around the increased fund-raising flexibility and potential capital inflows.
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