Ujjivan small fin bank to offer personal loans; note ban trouble to end soon: CEO
Samit Ghosh, Managing Director and Chief Executive Officer of Ujjivan Small Finance Bank, expects the loan book to grow by 20 percent by year-end.
Beena Parmar
Moneycontrol News
As the cash-heavy microfinance industry still reels from the impact of demonetisation on its collections and disbursements, the new Ujjivan small finance bank is aiming to diversify its loan products, improve collections and turn around its losses by the end of the year.
“We are looking at personal loan products which we want to launch soon. We will also add 88 more branches from the 100 so far… next two quarters will definitely be about closing the tale,” Samit Ghosh, Managing Director and Chief Executive Officer of Ujjivan Small Finance Bank, told Moneycontrol.
Ujjivan Financial Services, the holding company and promoter of 100 percent subsidiary Ujjivan Small Finance Bank, narrowed its losses to Rs 11.95 crore for the second quarter of 2017-18 from that of Rs 73.01 crore in the same quarter of previous fiscal.
The microlender-turned-small finance bank’s loan book grew marginally by 6 percent over a year ago and 4.1 percent from the previous quarter at Rs 6,364 crore.
Ghosh expects the loan book to grow by 20 percent by year-end with the aggressive push at asset diversification and revamping the bank’s affordable housing and micro and small enterprise financing business. “We have hired new leadership talent as well and expect that to grow significantly,” he said.
It will also target a deposit base of Rs 4,500 crore by year end, from the current Rs 1,349.1 crore.
Demonetisation impact and competition
Ujjivan has also set up a specialised collection team of over 300 people to look at the portfolio which has overdues beyond 90 days.
“Last quarter we collected about 15 crore. In October itself we collected about 7 crore. So we expect a lot of NPAs to come back (upgraded as standard),” Ghosh said.
Post demonetisation, the defaults in most microlenders’ books shot up owing to unavailability of cash with borrowers.
Ghosh explained that in a branch of 10,000 customers, the defaults rose from 100-200 to 1,000-1,500.
He sees major competition from banks like Bandhan Bank, IDFC bank and now IndusInd Bank, which have recently acquired other microfinance instutions.
“More and more players are getting into this business and hence we see there is potential in this industry for sure. I don’t think competition changes but for our business, one has to be well capitalised and secondly, they have to be a bank to offer multiple products on deposits, loans, insurance, etc. We have both,” Ghosh said.
The small finance bank will add 88 more branches by March from the 100 so far and hire about 500 more employees, taking the headcount to 11,000 people.
