Banking's Newest Billionaire

With a net worth of $1.3 billion, Sanjay Agarwal debuts on Forbes’s list of world’s billionaires. His AU Small Finance Bank aims to be counted among its larger peers over the next decade

- Samar Srivastava

By 2017, Sanjay Agarwal had spent two decades handing out automobile loans. While he admits the first decade had been slow, the venture grew rapidly in the next and was on its way to carving out an enviable niche as a nonbanking finance company (NBFC). But the 50-year-old first-generation entrepreneur who founded the company in 1996 as AU Financiers had seen first-hand the problems firms like his face when raising money. A lack of financing (and poor quality loan book) had proved to be a death knell for several peers.

At the same time, the mandarins at Mint Street wanted to further their pet cause—financial inclusion. Banking needed to be taken much deeper to small-town India, and while scheduled banks had pitched in over the last four decades, large swathes of Indians were still dependent on moneylenders and their usurious rates of interest. Enter small finance banks that were regulated by the Reserve Bank of India (RBI).

“We knew that NBFCs could never be the main platform as raising money is a challenge, professionals prefer to work for banks and borrowers will always go to banks first,” says Agarwal. At the same time, AU Financiers had a two-decade track record of making loans and collecting on them. Agarwal raised his hand for consideration in 2017. In all, ten banks were licensed with AU Small Finance Bank being the largest (AU is the periodic symbol for gold). It was the only NBFC out of 72 applicants chosen by the RBI. “Suddenly a much larger field opened up for us,” he adds.