From Microfinancing to Banking
With a special focus on rural, unserved and underserved areas, Ujjivan Microfinance Services has commenced its full fledged banking services to the customers. It would convert all its 457 microfinance branches into bank branches in three years. Mohd Musta
With having one third customers in the rural areas in its old form of microfinance institution, the Ujjivan Small Finance Bank (SFB) is giving special focus on the rural, unserved and underserved areas. Working as a microfinance institution since 2005, it commenced full fledged banking services as a small bank since February 1, 2017.
Expanding further, Ujjivan today announced the commencement of banking operations in Delhi by converting its five microfinance centres as its bank branches, located in Budh Vihar, Pul Prahaladpur, Vigyan Vihar, Nangloi and Hastsal. Since February, Ujjivan SFB has established 20 branches in Bengaluru, Ramanagara, Mumbai and New Delhi.
Ujjivan is focusing on converting its all 457 microfinance branches into bank branches in three years. Since its commencement of banking services, in 100 days, it is focusing on starting banking services in all parts of the country by opening in Kolkata and Pune. It is already providing banking services in Karnataka, Delhi and Mumbai.
The bank commenced operations as a Small Finance Bank after getting the a licence from Reserve Bank of India under Section 22 (1) of the Banking Regulation Act, 1949 to carry on the business of small finance bank in India.
Speaking on the commencement of banking services, Samit Ghosh, Managing Director, Ujjivan SFB said, “After serving our customers as a microfinance entity for over a decade, I am pleased to announce the launch of banking operations. The transformation to a Small Finance Bank will empower the unserved and underserved customer segment with a full range of banking services. Our immediate objective is to reach out to the large unbanked populace and get them into the formal banking system.”
Highlighting the bank’s footprints, he said, “In 10 years, we would be able to be the best small finance bank in India as earlier we excelled in microfinance. The segment, we are focusing on, is
largely unserved and underserved. We have designed our strategies and products after conducting intensive research on the likes and dislikes of banking customers.
“We have especially designed our services to increase the customer base in the targeted. In one year, we are going to open 25 branches in the unbanked rural areas,” Ghosh added.
Asked by Rural & Marketing, whether it adopts banking correspondent model or full fledged bank branches to serve rural areas? Ghosh, said, “Our customers are equally divided in urban, semi-urban and rural areas. As per RBI’s mandate, we are required to open 25 percent branches in the unbanked rural areas. Those are complete rural branches. We are going to rural customers directly.”
Ujjivan SFB has also launched a powerful, educational film on financial literacy titled ‘Paison Ki ABCD’ in partnership with Parinaam Foundation, a non-profit organisation. Financial Literacy of the economically deprived is the first step towards ensuring financial inclusion in India. Through the film, Ujjivan SFB and Parinaam Foundation intend to influence the mindset of consumers, eliminate the misconceptions about banking and educate them about the importance and benefits of a bank account. The film highlights how Ujjivan SFB will make the banking process simple, accessible for customers; strengthen their finances and set their future on a path of financial freedom.
“We will continue to do financial literacy as a small finance bank. We are the only bank to operate its all ATMs with biometrics,” Ittira Davis, Chief Operating Officer of the bank said.
Ujjivan SFB is a wholly owned subsidiary of Ujjivan Financial Services. Over the past decade, Ujjivan has built a strong presence in New Delhi with 9 microfinance branches catering to over 71,000 customers. The existing Ujjivan customers in the city would be on-boarded as bank customers. The process of on-boarding over 30,000 microfinance customers has already been initiated, while the transition for the rest will take place in a phased manner.
Elucidating the banking services, Davis said, “We are striving towards making banking more seamless and accessible for our customers and hence we have invested significantly on technology and digitisation. Ujjivan SFB is offering savings bank account with no charges for minimum balance. Additionally, we are providing a whole host of benefits such as doorstep banking, mobile, internet and phone banking, access to biometric ATMs and Aadhaar enabled debit cards. Aadhaar enabled KYC enables paperless account opening in approximately 5-7 minutes using biometric authentication on a hand-held device. The device can also be used for cash deposits, withdrawals and fund transfers at the customer’s doorstep.’’
The customers of Ujjivan SFB will have unlimited access to ATM transactions on its ATM network and a total of six free transactions on other bank’s ATM networks in a month.
Ujjivan SFB will also offer remittance services enabling customers to transfer money within Ujjivan and other bank accounts in a very reasonable and affordable manner.
Going further, the Ujjivan has recently commenced its operations in Tamil Nadu by inaugurating five branches. The branches are located in Salem, Krishnagiri, Dharmapuri, Vellore Katpadi and Tirupathur. USFB at present has 34 branches spread across Karnataka, Maharasthra, New Delhi and West Bengal besides Tamil Nadu. Ujjivan’s Microfinance business was already operational in 24 districts in Tamil Nadu with 56 branches. In less than four months of the bank launch has established presence across all four regions - South, North, East and West and in the coming months, it is planning to increase banking footprint across the country.
Ujjivan SFB aims at building a leading state-of-the-art mass market bank in five years to serve the vast unserved and underserved customer base who currently are outside the formal banking system. Focussing on serving the underserved population in the country, Ujjivan is expected to bring effective financial inclusion in the remote areas.
Ujjivan's customers are equally divided in urban, semi-urban and rural areas. As per RBI’s mandate, the bank is required to open 25% branches in unbanked rural areas. Those are complete rural branches