Ujjivan Small Finance Bank is aiming for an equal mix between its microfinance and non-microfinance businesses over the next 3-4 years.

The bank, which will complete five years in 2022, has its eye on the conversion to a universal bank.

In the quarter ended December 30, 2020, micro banking constituted 73.2 per cent of the gross advances and includes group loans, individual micro loans and agri and allied loans.

The remaining non-microbanking business included advances to micro and small enterprises, affordable housing and institutional lending.

“The non-MFI side of business is expected to grow at a faster pace. Our road map is that we want to be 50 per cent MFI and 50 per cent non-MFI in the next 3-4 years,” said Nitin Chugh, MD & CEO, Ujjivan Small Finance Bank.

“We want to grow the affordable housing business in proportion to the demand that we can cater to. Vehicle finance and personal loans are at an early stage and next year our endeavour would be to scale them up. We are piloting gold loans. Credit card is also something that we want to introduce next fiscal,” Chugh said.

On the liability side, he said the thrust on retail deposits, the proportion of which is expected to grow to 75-80 per cent in 3-4 years. “We have replaced a lot of bulk deposits with retail deposits and in the process we brought about some efficiency in our cost of funds as well,” Chugh said.

Bengal recovery

The collection efficiency of Ujjivan Small Finance Bank in Bengal had declined to 74 per cent in September 2020 because of the factors associated with the lockdown such as the closure of suburban trains along with the impact of Cyclone Amphan.

“Suburban trains only started working from the first week of November. So, there was fairly reduced mobility from suburban Calcutta and our MFI customers were impacted. ”

The collection efficiency was lagging behind but it has improved quickly and by December has reached 92 per cent,” Chugh said.

Reverse merger

The bank would initiate a reverse merger process with its holding company once it completes five years. The holding company — Ujjivan Financial Services Limited — is a listed entity and currently holds 83.3 per cent stake in the bank.

“It is our desire at some point to convert to a universal bank. But, the first thing that we are keen to go through is the reverse merger,” Chugh said.