AU Small Finance Bank has received credit rating reaffirmation from CRISIL Ratings across its debt instruments, reinforcing the bank's strong financial position and operational performance. The rating agency announced its decision on April 02, 2026, maintaining stable outlooks across all rated instruments while highlighting the bank's demonstrated ability to meet expectations around asset quality improvement and earnings profile sustenance.

Rating Reaffirmation Details

CRISIL Ratings has reaffirmed multiple ratings for AU Small Finance Bank's debt instruments, reflecting confidence in the bank's financial stability and growth trajectory.

The rating agency also withdrew its rating on Tier II bonds aggregating Rs 650 crore as these instruments have been fully redeemed, with independent verification confirming complete redemption in line with CRISIL's withdrawal policy.

Strong Capitalisation and Financial Performance

AU Small Finance Bank's capitalisation remains adequate in relation to its scale of operations, supported by steady internal accruals and a proven track record of raising need-based capital. The bank's financial metrics demonstrate robust performance across key parameters.

The bank's deposit franchise continues to show strong traction with deposits reaching Rs 138,415 crore as of December 31, 2025. Retail assets comprise over 78% of advances, with vehicle financing contributing around 34% and Micro Business Loans accounting for approximately 26% of the gross loan portfolio.

Asset Quality and Profitability Metrics

Asset quality metrics remain controlled despite some marginal increases, with GNPA and NNPA standing at 2.30% and 0.90% respectively as of December 31, 2025. The bank reported profit after tax of Rs 1,809 crore for the nine months ended fiscal 2026, maintaining a healthy return on assets of 1.50%.

Deposit Profile and Liquidity Position

The bank's deposit base composition shows CASA and retail deposits accounting for 28.90% and 60.40% respectively of total deposits as of December 31, 2025. While the deposit franchise continues growing, CRISIL noted that the share of CASA and retail deposits remains moderate compared to larger private banks. The bank maintained a strong liquidity position with an average Liquidity Coverage Ratio of 118% for the quarter ended December 31, 2025, well above the regulatory requirement of 100%.

Strategic Developments and Outlook

AU Small Finance Bank received in-principle approval from the Reserve Bank of India on August 7, 2025, to become a universal bank with an 18-month transition period. However, on February 18, 2026, the Haryana state government de-empaneled the bank for government business, though management reports no major deposit outflows following this development.

CRISIL Ratings maintains a stable outlook, believing AU SFB will sustain its asset quality metrics and profitability at above-average levels while scaling up the loan portfolio. The rating agency expects continued build-up of the bank's liability franchise driven by increasing share of CASA and retail term deposits in total deposits and overall borrowings.

AU Small Finance Bank and Kotak Mahindra Bank branches across Haryana remain non-operational despite significant police deployment outside their facilities. The heightened security measures indicate ongoing concerns that have prevented normal banking operations from resuming.

Security Deployment and Branch Status

Heavy police presence has been established outside multiple bank branches of both institutions throughout Haryana. However, this security deployment has not enabled the reopening of banking services for customers.

Impact on Banking Operations

The continued closure affects customers' access to essential banking services across the region. Both AU Small Finance Bank and Kotak Mahindra Bank customers in Haryana are unable to conduct regular banking transactions despite the visible security arrangements.

The situation highlights the challenges faced by financial institutions in maintaining operations during periods requiring enhanced security measures. The deployment of heavy police forces suggests authorities are taking precautionary steps, though banking services remain suspended for both institutions in the affected areas.