Annapurna Finance’s Banking Dreams on Hold as RBI Rejects Application for Second Time

Image Source: The Economic Times

The Reserve Bank of India (RBI) has once again turned down the application from Bhubaneswar-based Annapurna Finance Private Limited to establish a universal bank, marking a significant setback for the PE-backed microfinance giant's growth ambitions. This is the second time that Annapurna's request for a universal banking license has been rejected by the central bank, following their initial application in January 2023.

Key Highlights

Second Rejection: The RBI has declined Annapurna Finance’s application for a universal bank for the second time, stating that the applicant was “not found suitable for granting of in-principle approval” according to the current regulatory guidelines.

Background: Founded in 2009, Annapurna Finance ranks among India’s top 10 NBFC-MFIs, focusing on providing microcredit to women through group lending, as well as offering loans for MSMEs, home improvements, and consumer goods.

Scale of Operations: By March 2025, Annapurna reported a loan portfolio of ₹11,034 crore, catering to 2.9 million customers across 1,636 branches throughout the country.

Industry Context: The RBI’s decision comes as part of a wider review of applications from financial institutions looking to upgrade to larger banking licenses. Other contenders like Fino Payments Bank and AU Bank are also vying for various types of banking licenses.

Official Statement: In its announcement, the RBI emphasized that the application was evaluated based on existing guidelines and deemed unsuitable, though it did not provide specific reasons for the rejection.

Ongoing Developments: Both the RBI and Annapurna Finance have refrained from commenting further on the decision. The situation is evolving as the sector looks for clarity on regulatory expectations for NBFCs aiming to transition into universal banks.

“The applicant was not found suitable for granting of in-principle approval to set up a universal bank,” the RBI stated in its official announcement.

Source: Business Standard, Reuters, The Hindu Business Line, Yahoo Finance, MarketScreener