I am glad to share with you that our overall financial and business performance in thefinancial year that passed by was quite strong and healthy.
Consolidated net profit 198 Crore from 7 Crore. Net interest income rose by 41% overthe previous year and net interest margin stood at 11.1%. Loan delinquencies werecontained. Gross non-performing loans stood at 0.9% and net at 0.3%. Our funding costdropped from 9.0% to 8.5%. Cost/Income ratio however rose and this spurt was primarily dueto the expansion of branch network one-time investment on modern technology platform andthe additional manpower cost to man the newly opened branches. Concerted efforts are on tobring down our cost/income ratio.
Turning to top line numbers loan book registered an impressive growth of 46% duringFY19 and the outstanding loan book at March 31 2019 stood at 11049 Crore. Our totalactive customer base increased by 19% this year from 39 Lakh to 46 Lakh with over 27Lakhcustomers having deposits. MicroBanking loans grew by a respectable 34%. Thrust onportfolio diversification continued and non-MFI portfolio constituted 15.3% of the loanbook as against 7.3% in FY18. We were able to fund 67% of our loan book with deposits.Retail deposits stood at 37.1% of total deposits against 11.3% in FY18. CASA ratio alsoimproved from 3.7% to 10.6%. Our network increased to 524 branches including 474 bankingoutlets and 50 asset centers. You will find detailed discussions on our financials andperformance elsewhere in the Annual Report.
I will now update you on some of the key regulatory developments.
Listing of Ujjivan Small Finance Bank Limited
You may recall as a non-banking finance company Ujjivan Financial Services Limiteddid not have any promoter/promoter group. We had to therefore opt for the holdingcompany structure' to be eligible for a smart recovery at applying for a small financebank licence. Once we received the in-principle approval' from the RBI for settingup a small finance bank we came up with our IPO to comply with the regulatory guidelinesthat the majority ownership of small finance bank should lie with domestic investors.Thereafter we formed our fully owned subsidiary Ujjivan Small Finance Bank' andtransferred our operational business undertaking to the newly set up entity through aslump sale. The holding company was thereafter registered with the RBI as a coreinvestment company (NBFC-ND-SI-CIC). As you all know there was overwhelming response frominvestors and our shareholding is well diversified among Indian public.
We have close to 75000 individual shareholders holding shares of the paid-up value ofless than 2 Lakh.
The scrip is actively traded and the price fully mirrors the performance of the newlyset up Ujjivan Small Finance Bank. Based on our publicly disclosed financialinformation of our Company and our Bank at periodical intervals the investors depositorsand creditors primarily assess the level of risk of the Bank and make investmentdecisions. Thus we are already subjected to the rigours of market discipline' andthe pricing information of the holding company shares is indicator of the bank's financialhealth. We had also more than adequately complied with the regulatory objectives for whichwe were licenced catering to the financial needs of the underserved and unserved. It is inthis background that we were sanguine that the regulator may relax yet another licencingstipulation viz. listing of Ujjivan Small Finance Bank on the domestic bourses. We werein constant dialogue with the regulator on this matter and represented that dual listingof both the holding company and the small finance bank may be superfluous and mayadversely impact the shareholder value of the holding company. If this were not feasiblewe sought their permission to collapse the time frame set and permit the holding companyto do a reverse merger with the small finance bank to protect the shareholder value.
The regulator has advised us that since listing of SFB was a licencing condition wehad to comply with the same. As for reverse merger of our Company with our Bank theregulator has kept the door open but will take a view on this closer to the fifth year. Weare therefore now working on the modalities of listing Ujjivan Small Finance Bank forminimum percentage of capital permitted by the regulators and will initiate work on thereverse merger of the two entities closer to our fifth anniversary.
We continue to endeavour to the best of our potential to safeguard the Company (HoldCo)shareholder interests.
On tap licencing of small finance banks
The Reserve Bank of India has recently announced that since the small finance bankshave attained their mandate of furthering financial inclusion there was a case for moreplayers to be included to enhance access to banking facilities to the small borrowers andto encourage competition. The RBI has therefore proposed to issue the Draft Guidelinesfor on tap' licencing of small finance banks by the end of August 2019. This is awelcome development and hopefully the guidelines will incorporate the smooth functioningof banks with holding company structure.
Small regulatory/supervisory framework
Since small finance banks now form a specific category' among the licencedbanking entities it is hoped that the regulator would fine tune their regulatory andsupervisory guidelines suited to these entities reckoning their business model and riskprofile. As long as these banks fulfill the objectives for which they were licenced andcomply fully with critical prudential guidelines like capital adequacy incomerecognition asset classification and provisioning liquidity management and corporategovernance standards and their risk profile is acceptable there is a case for easing theguidelines appropriately to minimise the regulatory cost. Regulatory compliance cost hitthe small banks hard.
Elsewhere in some of the developed financial markets there is a growing recognitionthat volume and the complexity of financial regulation are for small and medium sizedbanks extremely onerous and disproportionately costly. To avoid excessive compliancecosts or regulatory burden for smaller non-complex banks which could dampen theircompetitive position a proportionate approach is advocated tailoring regulatoryrequirements to the bank's size systemic importance complexity and risk profile. TheChairman of Financial
Stability Institute Bank for International Settlements at the recently held BIS/IMFpolicy implementation meeting specifically adverted on this issue of proportionality infinancial regulation and supervision.
Before I conclude on your and the Board's behalf I extend a warm welcome to Mr. NitinChugh CEO designate of our Bank. He will take over as the CEO of the Bank effectiveDecember 1 2019. Given his extensive retail and digital experience we are confident hewould take the Bank to newer heights and position the same as a mass market bank. Wehereby seek your full-hearted support to Mr. Nitin in all his business endeavours. I amalso glad to share with you Mr. Samit Ghosh the visionary leader and founder CEO ofUjjivan will continue to be associated with Ujjivan mentor the new CEO designate andensure his smooth transition to the leadership position in the Bank and thereaftercontinue to provide his wise counsel and guidance to Ujjivan although within differentcapacity.