Ujjivan Small Finance Bank: Information Analysis

A subsidiary of Ujjivan Financial Services, Ujjivan Small Finance Bank provides finance to the underserved and unserved segments in India. Commencing its journey in February 2017, it has emerged as a leading small finance bank (SFB) within a short time span. Its product portfolio comprises loans for micro-banking customers, such as group and individual loans, agriculture loans, medium and small enterprise (MSE) loans, affordable housing loans, vehicle loans, among others. This small finance bank is also authorised to provide savings, current and a variety of deposit accounts. These services differentiate it from its promoter (Ujjivan Financial Services), which operates as an NBFC. The bank is aiming to raise Rs 750 crore and use the amount raised to cater to capital requirements for growth. Strengths The unserved and underserved segments: It is one of the 10 small finance banks in India that caters to customers who do not have any access to formal banking services. Since its promoter is an erstwhile microfinance institution, the company is better able to address this segment in India. Geographical diversification: The bank has a presence in 24 states and union territories, spanning 232 districts in India. It caters to 4.94 million customers through 552 banking outlets, including 141 unbanked rural centres (as of September 30, 2019). Risk and Concerns High exposure to the micro-banking business:The bank is more dependent on its micro-banking segment, which accounted for 79 per cent of total advances as of September 30, 2019. Two years ago, this segment accounted for 97.5 per cent of total advances. The microfinance business hinges non-collateral loans which makes it more risker as compared to regular bank loans which are backed by collateral. The concentration of advances:A majority of advances are from customers located in Karnataka, Tamil Nadu and West Bengal. Advances from these states stoo