Deteriorating asset quality and the exodus of top executives were the twin concerns for Ujjivan Small Finance Bank, founder Samit Ghosh said on Friday, a day after the exit of the bank’s managing director and CEO Nitin Chugh.

Ujjivan Small Finance Bank shares tanked 18.76 per cent on the BSE on Friday after the news of Chugh’s exit on personal grounds.

Ghosh, who is at present the non-executive director and chairman of Ujjivan Financial Services Limited (the holding company of the bank), has been drafted back on the board of the bank as a non-executive and non-independent director to address these concerns. He had vacated the post of managing director and CEO in 2019 on retirement following which Chugh had assumed office.

The bank’s gross non-performing assets for the quarter ended June 2021 was 9.8 per cent versus 0.97 per cent in the corresponding period of the previous year. The bank reported a net loss of Rs 233 crore during the June quarter of 2020-21 against a profit of Rs 55 crore in the year-ago period. Even the pre-provisioning operating profits during the quarter at Rs 163 crore were down 24 per cent from previous year.

The bank’s management had attributed this largely to the onset of the second wave of the Covid pandemic and the consequent restrictions and lockdowns in its key markets — Tamil Nadu, Karnataka, Kerala, Maharashtra and Bengal.

Recently, the bank’s chief financial officer Upma Goel and directors Mona Kachhwaha, Harish Devarajan and Mahadev Lakhsminarayan had also resigned.

Clarifying to market analysts, Ghosh said Ujjivan had traditionally remained conservative on provisioning and upfront recognition of stressed assets. But this has fluctuated in the last one year — the provision coverage ratio fell from 82 per cent in June 2020 to 59 per cent in December 2020 before improving to 75 per cent in June 2021.

He said while the timing of Chug’s resignation was a “surprise”, the bank’s board which has now been strengthened will undertake a “tough” review of the loan book and begin the recovery process. Ghosh said he would also play a role in co-ordination between the holding company and the bank on the reverse merger process.

A board meeting is expected on August 25 to decide the future course of action. The board is likely to appoint an interim CEO. Ujjivan old-timer and the bank’s head of operations, Carol Furtado , could be given the role till the bank finds a new incumbent.