Debut in Telangana to mark Ujjivan SFB’s expansion to 25th state

CHENNAI: Ujjivan Small Finance Bank (SFB) is gearing up to enter Telangana, which will make it the 25th state for the pan-India Bengaluru-based microfinancier-turned-small finance bank.

Ittira Davis, MD-CEO, Ujjivan Small Finance Bank told DTNext “We are planning to enter Telangana state soon, where we plan to set up four to five branches. Our intention is to add 25 branches this year, taking our total branch network figure to 602 by this financial year.”

He also said the SFB has been evaluating its branch structure and owing to cost concerns, it would like to focus on its digital banking backbone. “We have a robust team, spearheaded by an experienced leader who joined us about seven months ago. Our intention is to craft a digital strategy that would be a blend of brick and mortar and the new-age opportunity,” Davis said. This approach would make it possible to contain the cost of expansion.

“Our portfolio comprises a fairly good spread with TN accounting for the largest business at 16 per cent, followed by Karnataka at about 14 per cent,” the banker said, adding the collections and recovery have been good so far as the bank seeks to maintain the 25-30 per cent growth momentum in its balance sheet.

The credit demand has seen uptick with the overall banking sector reporting a good quarter. Ujjivan SFB, like other players, is banking on the northern region to drive growth. “Our turnaround has been good due to collections and recovery. We are confident of sustaining our CASA growth on the deposits front,” Davis said, adding the bank is keen to balance its unsecured and secured portfolios, as efforts would be made to keep the latter at 30-35 per cent this year and 50 per cent in medium-term.

The whole book would grow, he sought to point out, adding Microbanking, since 2005, has been Ujjivan’s biggest business at 69 per cent. “Affordable housing at 15 per cent, 9-10 per cent from small and medium enterprises and 4-5 per cent from financial institutions, is the distribution in the book,” he said.

Ujjivan SFB is also mulling on introducing gold loans in October next quarter as part of its strategy for a broader base of customers.

SFB is awaiting RBI approval to push forth its plans for reverse merger. “We have finished raising Rs 475 cr through the Qualified Institutional Placement route to meet our capital requirements, meeting the Sebi conditions in this regard. We will now go to the RBI for clearance of the reverse merger, post which it will take a year to complete the process,” Davis said, noting that the SFB would look at acquisitions thereafter.

Pent up demand on the back of Covid-19 has worked well for the SFB, which has reported two record quarters of performance in FY 21-22. “Traditionally, the first two quarters tend to be slower but due to the pandemic, the third and fourth quarter grew substantially,” he said. In the April-June 2022 quarter, the lender’s net income stood at Rs 203 cr against a net loss of Rs 233 cr in June 2021 quarter. Its net income stood at Rs 127 cr for January-March 2022 quarter.