AU Small Finance Bank Unveils Sustainable Finance Framework, Receives Second-Party Opinion from Moody's
Enabling sustainable financing while advancing AU's commitment to responsible, inclusive, and sustainable growth.
Mumbai: AU Small Finance Bank, India’s largest small finance bank and the first bank in over a decade to receive in-principle approval from the Reserve Bank of India for transition to a universal bank, today announced the launch of its Sustainable Finance Framework. This further strengthens the bank’s commitment to financing positive environmental and social outcomes through responsible and inclusive banking.
As an early milestone in this journey, AU Small Finance Bank launched its Planet First Green Fixed Deposit program, which enables customers to contribute to eco-friendly projects and support India’s transition toward a low-carbon economy. As of June 2026, the program has mobilized over ₹3,050+ crore toward green financing, with 85% allocated to renewable energy, 10% to clean transportation, and 5% to green buildings, generating measurable environmental and social impact.
Building on this foundation, AU Small Finance Bank has launched its Sustainable Finance Framework, establishing a structured approach to support future sustainable financing opportunities. The framework has been independently verified through a Second-Party Opinion by Moody's.
The framework establishes clear governance processes, eligibility criteria, management of proceeds, and reporting mechanisms to mobilize and allocate capital toward eligible green and social projects. It also integrates sustainability considerations into the bank’s long-term business and growth strategy.
Further reinforcing the framework's credibility, Moody’s Ratings awarded it an SQS2 Sustainability Quality Score, recognizing its strong alignment with internationally accepted sustainable finance principles and its meaningful contribution to sustainability goals.
The framework aligns AU Small Finance Bank with global sustainable finance standards and best market practices, enhances transparency and disclosure practices, strengthens investor confidence, and ensures readiness for evolving ESG and climate-related regulatory expectations.
Moody’s Recognizes Framework Quality and Sustainability Impact
Under its independent evaluation, Moody’s assessed the framework across the following pillars:
Use of Proceeds
Project Evaluation and Selection
Management of Proceeds
Reporting
Sanjay Agarwal, Founder, MD & CEO, AU Small Finance Bank, said: "Over the last three decades, our journey has been built on empowering underserved communities, supporting entrepreneurship, and creating long-term value for all stakeholders. As we prepare for our next phase of growth toward becoming a universal bank, sustainability is becoming increasingly embedded in how we deploy capital, manage risk, and create impact.
The launch of our Sustainable Finance Framework is a significant milestone in institutionalizing our commitment to responsible finance. This framework provides a robust and transparent structure to mobilize capital toward sectors critical to India’s sustainable development agenda, including renewable energy, climate resilience, financial inclusion, affordable housing, MSME growth, and sustainable livelihoods."
Supporting India’s Sustainable Development Agenda
Through the Sustainable Finance Framework, AU SFB can mobilize and allocate capital across a wide range of eligible green and social sectors, including renewable energy, clean transportation, green buildings, financial inclusion, affordable housing, MSME development, healthcare, education, and livelihood generation. The framework is designed to deliver measurable environmental and social outcomes while contributing to India’s sustainable development priorities and inclusive growth goals.