Ujji­van Sees Num­bers in Mass Banking

Ujji­van SFB, which for­mally launched ops on Mon­day, aims to be­come uni­ver­sal bank in 5 years

The Economic Times - - Disruption: Startups & Tech - Mugdha.Vari­yar @times­group.com

Ben­galuru: Ujji­van Small Fi­nance Bank will aim to be­come a con­ven­tional bank in half-a-decade or so, its CEO in­di­cated, as the new­est small fi­nance bank for­mally launched op­er­a­tions on Mon­day.

Ujji­van’s aim is to serve the mass­mar­ket re­tail cus­tomers and there are some lim­i­ta­tions on a small fi­nance bank to do so, Samit Ghosh told ET on the side­lines of the launch event here. A small fi­nance bank must keep a ₹ 25-lakh limit on half the loans it hands out. Also, a quar­ter of its branches should be in un­banked ar­eas, which are pre­dom­i­nantly in ru­ral In­dia. Both are re­stric­tions for any lender that seeks to tap the credit de­mand of the na­tion’s thriv­ing mid­dle class to buy homes, ve­hi­cles and con­sumer durables.

“In five years, we would like to be a mass mar­ket re­tail bank and will ap­ply for a uni­ver­sal bank li­cence if there are re­stric­tions as a small fi­nance bank,” Ghosh said.

Se­quoia Cap­i­tal and In­ter­na­tional Fi­nance Corp-backed Ujji­van Fi­nan­cial Ser­vices started as a mi­cro­fi­nance firm in 2005. Last year, it raised ₹ 887 crore in an ini­tial pub­lic of­fer­ing. It was among 10 ap­pli­cants to have re­ceived cen­tral bank ap­proval to be­come a small fi­nance bank. It is the fifth to start op­er­a­tions.

On Mon­day, Ujji­van opened five branches in Ben­galuru. It will now of­fer sav­ings and de­posits, funds trans­fer, and other banking ser­vices such as debit cards and ATMs.

Ujji­van had about 8,000 em­ploy­ees as an MFI and added 2,000 more as it tran­si­tioned into a bank. It has built a call cen­tre in Ben­galuru and will set up an­other in Pune.

Ghosh said while the rate of in­ter­est on sav­ings ac­count and fixed de­posits will be com­pet­i­tive, it will lower in­ter­est rates on loans only after a few years, since op­er­at­ing costs will be high in the ini­tial years.

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