Shares of AU Small Finance Bank Ltd surged 7%, hitting an intraday high of Rs 800 on 8 August after the company announced securing approval from the Reserve Bank of India to become a Universal Bank.

This makes it the first Small Finance Bank in India to gain such permission since the central bank announced its “On-tap” license rules in April of last year.

AU Small Finance Bank submitted an application to become a Universal Bank in September of last year, and the decision took 11 months. This also establishes a precedent for Ujjivan Small Finance Bank and Jana Small Finance Bank, both of which have sought the same license.

While Ujjivan applied for the license in February of this year, Jana did so in June.

AU Small Finance is the largest SFB in the country, with a loan book of over Rs 1 lakh crore, which rose by 23% in the June quarter from the previous year. Equitas has the second-largest loan book, totalling Rs 38,000 crore.

While the license provides AU Small Finance Bank with strategic options, the long-term return will be determined by execution.

At 12:00 pm, the shares of AU Small Finance Bank were trading with modest gains at Rs 755.25, which is 1.61% higher than its previous close of Rs 743.25 on NSE.

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