In an exchange filing, the bank said, “The RBI, through its…letter, took note of the bank’s recent efforts towards diversification of its loan portfolio. However, it was of the view that there is scope for progress in this area. Therefore, RBI has returned the above-mentioned application and advised the Bank to consider applying again after demonstrating a diversified loan portfolio.”
The bank had submitted its application to transition into a universal bank in February 2025. It was among three small finance banks — Ujjivan Small Finance Bank, AU Small Finance Bank, and Jana Small Finance Bank — that had applied to the Reserve Bank of India for such a conversion. While AU Small Finance Bank received the RBI’s approval last year and is currently in the process of transitioning, Jana Small Finance Bank’s application has also been returned by the central bank.
As of the December quarter (Q3FY26), its secured loan book stood at 48 per cent of its ₹37,057 crore loan book. It has further improved to 49.4 per cent in the March quarter (Q4FY26). Back in Q4FY25, the secured book stood at 43.5 per cent.
The bank had earlier indicated that it has been focusing on expanding its secured portfolio over the past few years, with the shift gaining momentum and traction in FY25. The share of unsecured loans has declined from around 70 per cent a few years ago to a little over 50 per cent currently. The bank has stated that it intends to increase the proportion of secured lending to 65–70 per cent by March 2030.
“The application for transitioning to a universal bank was submitted as part of the bank’s long-term growth plans. Ujjivan will continue to embark on the path of diversification and will resubmit the application in due course, keeping RBI’s guidance in view,” the bank said in a statement on Monday.
According to RBI guidelines, only listed SFBs are eligible to apply for a universal banking licence. To qualify, they must have a minimum net worth of ₹1,000 crore, scheduled bank status, and a satisfactory operational track record of at least five years. Additionally, they should have been consistently profitable, with gross non-performing assets below 3 per cent and net NPAs under 1 per cent over the past two financial years.
While a diversified loan book is not an explicit requirement under the central bank’s norms, industry insiders said that beyond the prescribed guidelines for small finance banks (SFBs) seeking conversion into universal banks, the Reserve Bank of India is closely evaluating additional parameters. These include the extent of diversification across asset classes and geographies, the size of the loan book, governance standards, and asset quality, with particular emphasis on gross NPAs.
 "Reserve Bank of India (RBI)")