India's small finance banks are embarking on an aggressive talent acquisition strategy as they prepare for a transformative phase in their evolution. Several prominent institutions are actively recruiting senior executives from larger banks and non-banking financial companies, signaling their readiness to transition from niche players to universal banking entities.

Strategic Hiring Initiative

AU Small Finance Bank , Ujjivan Small Finance Bank, Suryoday Small Finance Bank, and Utkarsh Small Finance Bank are leading this recruitment drive, targeting key business officers, vice-presidents, and executive vice-presidents from established financial institutions. The move represents a strategic shift as these banks prepare for more complex growth phases where managerial capability and talent depth become as crucial as rapid balance-sheet expansion.

According to industry sources, candidates are attracted to these positions through substantial compensation increases and significant role elevations. For instance, a senior vice-president of finance at a traditional bank can transition to a chief financial officer role at these small finance banks.

Regulatory Approval Status

The transition landscape varies among these institutions:

Hiring Momentum and Compensation Strategy

The aggressive recruitment strategy is reflected in substantial workforce expansion across the sector. In 2025, small finance banks demonstrated remarkable hiring momentum compared to the broader banking industry:

A Suryoday Small Finance Bank spokesperson explained their prudent approach to role-mapping, typically offering positions not more than two levels above a candidate's current role. Key factors determining seniority fit include customer base handled, geographic scope, and team span. While compensation increments exceeding 20% occur in isolated instances, these are structured with balanced immediate and long-term components.

Universal Banking Transition Requirements

The Reserve Bank of India established specific eligibility criteria for small finance banks seeking universal banking licenses. Only listed SFBs qualify for consideration, with requirements including:

• Minimum net worth of ₹1,000.00 crores
• Satisfactory track record of at least five years
• Net profit in the last two financial years
• Compliance with paid-up capital norms

Talent Acquisition Focus Areas

Upasana Agarwal, partner at ABC Consultants, identified key areas driving talent demand in small finance banks: product development, technology advancement, sales leadership, and management strengthening. The recruitment extends beyond senior positions, with a 30% increase in junior-level hiring as SFBs expand operations significantly.

Veinu Nehru from Fynehand Consultants noted that these banks recognize the need for competitive compensation to attract talent from universal banks, particularly as they prepare for branch expansion and multi-level staffing requirements associated with universal banking status.

Sector Performance and Challenges

Small finance banks have established strong market presence through rapid growth between FY22 and FY25:

However, challenges remain in low-cost deposit acquisition. As of March 2025, small finance banks' current and savings account deposits represented 26.20% of overall deposits, resulting in higher cost of funds at 7.30% compared to the banking sector average of 5.30%.

The strategic talent acquisition initiative reflects the sector's evolution from its original mandate of serving unserved and underserved segments to preparing for comprehensive banking operations, marking a significant milestone in India's financial services landscape.

Citigroup has issued a Buy rating for au small finance bank , setting a target price of ₹1,150.00 for the stock. This recommendation indicates the global brokerage's confidence in the bank's growth trajectory and market position.

Brokerage Recommendation Details

The following table summarizes Citigroup's recommendation:

Market Implications

Citigroup's Buy rating on AU Small Finance Bank reflects positive sentiment toward the institution's business model and growth potential. The ₹1,150.00 target price provides investors with a specific benchmark for evaluating the stock's potential performance.

The recommendation comes as small finance banks continue to play an important role in India's financial services sector, particularly in serving underbanked segments of the population. AU Small Finance Bank operates in this specialized banking category, focusing on financial inclusion and serving customers in smaller cities and rural areas.

Investment Perspective

The Buy rating from Citigroup adds to the analyst coverage of AU Small Finance Bank, providing market participants with professional assessment of the stock's investment merit. The target price of ₹1,150.00 serves as a reference point for investors evaluating their investment decisions in the small finance banking space.