Why did AU Small Finance Bank fall by 8% today? Check the reason

Synopsis:- Shares of a leading small finance bank fell nearly 8% after the Haryana government de-empanelled it for state business. The move followed queries over ₹47 crore transactions. Government deposits dropped from ₹735 crore to ₹538 crore, though management said there is no financial impact.

The shares of this commercial small finance bank plummeted by 8 percent in today’s trading session from a day low after the deempanelment of the Bank, along with another private sector bank, by the Government of Haryana for government business.

With a market capitalisation of Rs 71,361.99 crore, the shares of AU Small Finance Bank Ltd were trading at Rs 954.80 per share, decreasing around 7.21 percent as compared to the previous closing price of Rs 1,028.95 apiece.

De-empanelment decision

The shares of AU Small Finance Bank Ltd have seen bearish movement after media reports linked it to the Haryana government’s de-empanelment decision. The bank clarified that it received communications from the concerned department seeking account details and information on suspected transactions. Soon after, it was informed about its de-empanelment for government business in the state.

Subsequently, the bank initiated an internal review and stated that both the government and customer accounts were opened following due KYC norms and proper authorisation. It explained that the  Rs 47 crore transferred to a customer account was based on duly authorised instructions from the government department, with a complete audit trail maintained and shared with authorities.

Moreover, the bank emphasised that there is currently no indication of financial loss or fraudulent activity impacting it. Government deposits have declined from about  Rs 735 crore to  Rs 538 crore post de-empanelment, representing just 0.4% of overall deposits. Meanwhile, the board has been informed that certain employees have been placed off-duty, and discussions with the government are ongoing.

The bank reported healthy growth in Q3FY26, with interest income rising 15% year-on-year to  Rs 4,727 crore from  Rs 4,113 crore. Net profit also increased 27% to  Rs 668 crore. The steady expansion in earnings reflects improved lending growth, stable margins, and disciplined cost management despite a challenging operating environment.

The bank delivered strong deposit growth in Q3FY26, with total deposits rising 23.3% YoY to  Rs 1,38,415 crore. CASA deposits grew 16% YoY, maintaining a healthy ~29% ratio. Stable deposits form 80% of the total base, reflecting strength. Meanwhile, the cost of funds declined to 6.61%, indicating improved funding efficiency and better liability management.

AU Small Finance Bank Ltd is one of India’s leading small finance banks, focused on retail and MSME lending. Founded as a vehicle finance company, it later transitioned into a bank and built a strong presence across semi-urban and rural markets, offering deposits, loans, and digital banking services nationwide.

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