Ujjivan SFB applies for a universal banking licence to expand offerings

Ujjivan SFB is the second lender after AU SFB to seek a voluntary transition into a universal bank

Ujjivan Small Finance Bank (SFB) on Tuesday said it has submitted an application to the Reserve Bank of India (RBI) seeking a universal banking licence to strengthen its offerings and its position in the sector.

 

The Bengaluru-based lender is the second SFB after AU SFB to apply for a universal banking licence under the voluntary transition route.

 

“The Bank has consistently demonstrated strong financial performance and a commitment to financial inclusion, serving a diverse customer base across the country. Securing the universal banking licence, if approved, will strengthen Ujjivan’s efforts to provide holistic financial services to its customers and empower all aspiring Indians with a wider range of banking solutions,” said Sanjeev Nautiyal, MD & CEO, Ujjivan SFB.

   

Ujjivan SFB, which started operations in February 2017, has about 9.3 million customers through its 753 branches spread across 26 states and union territories in the country. As of December 31, 2024, its gross loan book stands at Rs 30,466 crore, and its deposits stand at Rs 34,494 crore.

 

“The diversification of the loan book has seen accelerated results, with the secured segment contributing 39 per cent to the overall loan book,” the bank said in a statement.

 

According to RBI norms, to be eligible for conversion into a universal bank, these banks must have a minimum net worth of Rs 1,000 crore, hold scheduled status, and have a satisfactory track record of at least five years. Additionally, they must maintain a gross non-performing asset (NPA) ratio of 3 per cent or less and a net NPA ratio of 1 per cent or less over the past two financial years. Additionally, the norms say only listed small finance banks will qualify.

 

Further, these must also have reported a net profit in the past two financial years and meet the prescribed capital adequacy norms. The RBI also requires these SFBs to provide a detailed rationale for their conversion into a universal bank, with preference given to those with a diversified loan portfolio.

 

Meanwhile, Bengaluru-based Jana Small Finance Bank is also harboring ambitions of transitioning into a universal bank. The bank has made additional or accelerated provisions to keep its gross and net non-performing assets (NPA) within the regulatory requirement of 3 per cent and 1 per cent respectively.