Tag: Ujjivan Financial Services

Sebi relaxes minimum promoter lock-in norm for Ujjivan SFB, Ujjivan Fin Services for amalgamation, BFSI News, ET BFSI

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Markets regulator Sebi has provided relaxation with regard to the minimum promoter lock-in norm to Ujjivan Small Finance Bank (SFB) and its promoter Ujjivan Financial Services, for the purpose of their amalgamation. On October 30, the bank had approved the scheme of amalgamation between Ujjivan Financial Services (transferor company) and Ujjivan SFB (transferee company).

Following this, it had submitted a joint application on behalf of the transferor/promoter to Sebi, seeking relaxation of the three-year minimum promoter lock-in requirements.

Besides, it also sought approval to adopt the proposed scheme of amalgamation as a method to achieve the minimum public shareholding.

“…we hereby inform you that the Sebi, vide its letter dated December 2, 2021, has acceded to our request to relax the three-year minimum promoter lock-in requirements,” it said in a regulatory filing.

The exemption is subject to no-objection certificate (NOC) from the exchanges and final approval by the National Company Law Tribunal (NCLT).

“The exemption being granted from lock-in is only for the period commencing after approval of the proposed scheme of amalgamation by NCLT and till expiry of the lock-in period,” it said citing the Sebi letter.

However, the Sebi specified that the relaxation is granted to them for the “specific purpose of scheme of amalgamation” between Ujjivan Financial Services and Ujjivan SFB and “shall not be treated as a precedence”.

Further, as advised by Sebi, the bank will initiate necessary steps to ensure compliance with minimum public shareholding requirements through mode specified under Sebi circular dated February 22, 2018, it added.

Currently, Ujjivan Financial Services holds 83.32 per cent of the equity shareholding and 100 per cent of preference shareholding of Ujjivan SFB.

As per the minimum shareholding norms, the promoter’s minimum initial contribution in the SFB arm should be at least 40 per cent. If the promoter’s initial shareholding in the SFB is in excess of 40 per cent, it is to be brought down to 40 per cent within a period of five years from the date of commencement of operations of SFB.

This period of five years is expiring on January 31, 2022.



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Ujjivan Financial Services Q2 loss at Rs 68 cr, BFSI News, ET BFSI

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Ujjivan Financial Services on Saturday reported a consolidated net loss of Rs 68.18 crore for September quarter 2021-22. It had posted a net profit of Rs 89.76 crore in the year-ago same period. Sequentially, the net loss narrowed from Rs 99.33 crore in quarter ended June 2021.

Total income was down at Rs 731.90 crore in the quarter under review as against Rs 828.47 crore in the year-ago period, Ujjivan said in a regulatory filing.

Expenses were higher at Rs 822.73 crore during the quarter. In the year-ago period, expenses stood at Rs 704.95 crore.

“Barun Kumar Agarwal, CFO of the company has tendered his resignation from the company to take up a senior position role in the finance department of the bank,” the filing further said.

His resignation from the company will be effective from November 15, 2021 (close of business hours), it said. Ujjivan Financial Services is the parent company of Ujjivan Small Finance Bank. PTI KPM ANU ANU

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After CEO’s exit, Ujjivan SFB trying to get the house in order

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Ujjivan Small Finance Bank is seeking to get its house in order after the sudden announcement of the exit of its Managing Director and CEO Nitin Chugh last month, and the old order is likely to make a comeback at the lender.

Three independent directors including BA Nambiar – Chair Designate, Ujjivan SFB, Rajni Mishra – Chair of Risk Committee, and Ravichandran Venkataraman – Chair of Nomination and Remuneration Committee, are a part of the RBI approved Special Committee of Directors to oversee the operations and administration of the bank, Samit Ghosh – Common Director on Ujjivan SFB and Ujjivan Financial Services told BusinessLine in a message. He, however, did not respond to requests to speak further on the bank.

Also see: Making the banking sector more vibrant

“It looks like the old order strikes back with Samit Ghosh wanting to retain control of the likely merged entity. The Reserve Bank of India has now allowed merger with holding companies,” noted an expert who did not wish to be named.

“Bank has started working internally along with the Holding Company to initiate various steps for effecting the reverse merger,” Chugh had said in the annual report.

Significantly, Carol Furtado who has been appoitned as Officer on Special Duty (OSD) and will then take charge as Interim CEO, has been a part of the Ujjivan Group since 2005 and was designated at Ujjivan SFB as Head of Operations and Service Quality. Subsequently, she moved into Ujjivan Financial Services, serving as the CEO.

Annual general meeting

The lender is scheduled to hold its annual general meeting on September 27 where it will have to address shareholder queries on reasons for top level exits from the management.

The AGM has also sought shareholders’ approval to appoint Samit Ghosh and Sudha Suresh as non-executive non-independent directors and appointment of Rajni Mishra, Banavar Anantharamaiah Prabhakar, Rajesh Kumar Jogi and Ravichandran Venkatarama as independent directors on the board of Ujjivan SFB.

The bank’s management has remained tight lipped about these recent developments, although there have been indications that some felt there was undue interference from the holding company – Ujjivan Financial Services.

Ujjivan SFB did not respond to a query from BusinessLine on the issue.

Chugh’s resignation

In a stock exchange filing on August 19, Ujjivan SFB had said Chugh has tendered his resignation as MD and CEO citing personal reasons. He will step down from the role on September 30.

Analysts had noted at the time that while the press release indicated that Chugh’s resignation was due to personal reasons, the impression from the analyst call was that it was mainly due to the bank’s persistent under performance on the asset-quality front, delayed recognition and correction of NPAs in MFI, and large-scale attrition at the lower-middle level.

“In our view, apart from the bank’s under performance, some niggling issues with the old management and his incompatible new-age management style in the still MFI-dominated old school bank, could also have contributed to the resignation,” Emkay Global had said in a note last month.

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Stabilising Ujjivan Small Finance Bank first priority for new management, other future plans on slow lane, BFSI News, ET BFSI

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The future strategy of Ujjivan Small Finance Bank detailed in the annual report has just turned irrelevant.

While the bank had listed a slew of digital-centric innovations to increase product suite and improve customer outreach in its latest annual report signed by outgoing chief executive Nitin Chugh, the new management has put stability as its foremost priority, pushing everything else to the backburner for the time being.

The annual report said the bank plans to enhance its payments and ecommerce presence through fintech partners and scale up business segments such as gold loans, farm loans and loans to small and medium enterprises in FY22.

“Forget all that, our first focus is to stabilise the portfolio and the organisation,” a senior executive close to the current management told ET, in what could well be a reflection of the alleged conflict between the previous and current management.

Ujjivan founder and former managing director Samit Ghosh, who has been brought back on the bank’s board as an additional director, declined to comment.

Chugh resigned last month citing personal reasons. It is widely viewed that Ujjivan Financial Services, the holding firm for the bank, was unhappy with Chugh’s handling of asset quality following the pandemic-led stress. The promoter also expressed concerns over high attrition with several senior and middle-level executives leaving the bank.

The bank’s gross non-performing assets jumped to 9.5% at the end of June from merely 1% as of March 31, 2020. Attrition rate was nearly 20%.

Following Chugh’s exit, the group selected Carol Furtado, who was a founding member of Ujjivan Financial Services, as its interim chief executive. Chugh will officially leave the bank on September 30.

“We expect FY22 to be a year of reasonable growth and stabilisation as we retain our sharp focus on improving our earnings, maintaining a healthy portfolio quality with emphasis on digitisation that would enhance our diverse product offerings,” Chugh said in the annual report for FY21.

The bank’s digitalisation process gained steam during his two-year stint.

“Going forward, we aim to strengthen our end-to-end process digitalisation efforts and use the power of digital as a new customer acquisition and service channel,” the bank said in the annual document for shareholders. “We will also leverage the power of analytics for actionable insights for data-driven decision making. We will continue to leverage our full-stack API banking platform to partner with the fintech ecosystem for faster time to market and innovative products and solutions for our customers,” it said.

While the first half of the financial year for Ujjivan went by navigating through the pandemic-led crisis compounded by the second wave, the next three-to-four months would be invested in bringing stability at the board and the management level. Several board members including chairman B Mahapatra Mona Kachhwaha, Ittira Davis and Harish Devarajan had left over the past few months.

The new management would also focus on an imminent reverse merger in the next few months. The bank, which completes five years of operations on January 31, 2022, is allowed by the Reserve Bank of India to reverse merge itself with the holding company.



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Ujjivan Small Finance bank to do portfolio quality & process audit, BFSI News, ET BFSI

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About 68 per cent of the Rs 14,000-crore loan portfolio is still in the unsecured microfinance space at Ujjivan, where chief executive Nitin Chugh unexpectedly quit last week, capping off a raft of top-level exits at the lender that went public in 2019.

“We are trying to identify a candidate internally who can manage the day to day operation till Nitin leaves. Carol Furtado is the top candidate,” Ujjivan founder Samit Ghosh told investors on Friday morning.

Ujjivan Small Finance Bank has decided to do an independent portfolio quality & process audit as it is facing stress on asset quality following the disruptions caused by the pandemic.

It will also review its provisioning policy to create an adequate buffer against credit risk.

The holding company of the bank, Ujjivan Financial Services, had earlier expressed concerns over asset classification, bad loan recognition and the ad-hoc bad loan provisioning under chief executive Nitin Chugh, who resigned last week.

The bank on Wednesday appointed Carol Furtado as office on special duty to manage day-to-day operations in the bank till Chugh’s official exit on September 30.

“The bank is undertaking an independent portfolio quality & process audit. We look towards streamlining the provisioning policy. We are confident of strengthening the organisation and emerging as a stronger Ujjivan,” founder of the bank Samit Ghosh said. Ghosh is the common director on the boards of the bank and the holding company.

“With the provision coverage ratio of 75%, the highest in the industry, we are very well positioned,” he added.

After Chugh’s exit, Furtado will be appointed as an interim CEO, subject to regulator’s approval, the company announced Wednesday after its board gave the stamp of approval on the proposal.

The bank also said that it will begin the search for the next full-time CEO and submit two names to the Reserve Bank of India seeking its approval.

In parallel, the bank has also appointed former Andhra Bank chairman BA Prabhakar as its chairman.

ET had highlighted the possibility of both the move immediately after Chugh’s resignation became public.

Furtado, part of the founding team of Ujjivan Financial Services since 2005, will be leading the charge of handling the day-to-day operations from August 26, the company said. Post September 30, she will take charge as the Interim CEO, subject to regulator’s approval.

Ujjivan Financial Services is the holding company for Ujjivan Small Finance Bank, which started its journey in February 2017.

“Carol has been our go to person during any major crisis. I am sure she will lead us out of this Covid crisis with flying colours,” said Ghosh.

Furtado has spearheaded the organisation on numerous occasions, playing critical roles in asset quality management and HR. “Her extensive experience, over a decade and a half, across business, operations, and HR, along with her expertise in leading Ujjivan, through various crises, make her an ideal candidate,” the company said.



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Carol Furtado is Officer on Special Duty at Ujjivan SFB

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The board of Ujjivan Small Finance Bank has appointed Carol Furtado as Officer on Special Duty.

“She will be handling the day-to-day operations of the bank from August 26, and will be serving the bank as OSD until outgoing Managing Director and CEO Nitin Chugh is in office. Post-September 30, 2021, she will take charge as the Interim CEO subject to RBI approval,” Ujjivan SFB said in a statement on Wednesday. The board of Ujjivan SFB, in parallel, will evaluate suitable candidates for the MD and CEO position, and submit two names to RBI for approval, it further said.

‘Portfolio quality’

“We do not foresee any near-term major issues in the portfolio quality of the bank. With the provision coverage ratio of 75 per cent, the highest in the industry, we are very well positioned. The bank is undertaking an independent portfolio quality and process audit. We look towards streamlining the provisioning policy,” said Samit Ghosh, Common Director on Ujjivan SFB and Ujjivan Financial Services.

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Samit Ghosh, BFSI News, ET BFSI

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We would have to stabilise the organisation, reverse merge and then, we will take up the universal bank licence largely because it is more efficient to operate from a capital perspective because the capital adequacy requirement in small finance bank is 15% whereas an effective capital adequacy requirement in universal bank is about 8%, says Samit Ghosh, Founder, Ujjivan Financial Services.

Ujjivan Financial Services is the holding company of Ujjivan Small Finance Bank and we have seen the small finance bank reporting losses and higher NPAs which can be attributed to the second Covid wave. But what led to such losses and when can we expect to return to profitability?
As far as the business is concerned Nitin (Nitin Chugh, MD & CEO of Ujjivan SFB) is the right person to answer this question. From our perspective, obviously the impact was because of the second Covid wave, which took a toll on our portfolio and right now it is in recovery mode. But we do not know when the next wave is going to hit because not enough Indians have been vaccinated and with the festive season coming, there could be another knock down effect on us.

We have been very concerned about the portfolio quality and the management of the portfolio business. We are closely monitoring it and this is something we have been worried about not just now, but from last year itself. We are a very conservative organisation and we always believed that we should provide upfront and take appropriate action because that has been our philosophy in the past and that is what we would like to see again.

RBI has approved the merger of holding companies with small finance banks. When do you see that happening for your company?
We complete five years in the beginning of February and we can apply three months before that. So we would be applying three months before February, around November. Once RBI clears us for reverse merger, the whole process might take between 9 and 12 months. There are hurdles not only in the RBI but also from the Sebi perspective. There are a couple of issues for which they have to give us clearance. We are keenly watching what happens to Equitas because they are ahead of us in this process and we will follow suit. But our process will start in November and once our approval is there by February, it will take another 9 to 12 months.

A lot of people are watching very closely whether or not you have the intention to become a universal bank. Is that something that you are still considering and what work is being done towards that end?
Firstly we have to reverse merge. That is the first step and it will stabilise us. We are going through a very difficult time right now, not only from a portfolio quality point of view but also from a people retention point of view. Lot of the people who actually built Ujjivan have left and that makes life more difficult for us. We would have to stabilise the organisation, reverse merge and then, we will take up the universal bank licence largely because it is more efficient to operate from a capital perspective because the capital adequacy requirement in small finance bank is 15% whereas an effective capital adequacy requirement in universal bank is about 8%. That we will take up after our own reverse merger process is over,



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Resolution to appoint Samit Ghosh as MD and CEO, Ujjivan Financial Services not approved

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A special resolution to appoint Samit Ghosh as Managing Director and CEO of Ujjivan Financial Services was not approved by the required majority of shareholders.

According to data with BSE, the special resolution to approve the appointment of Ghosh as MD and CEO of the company for a three year period, effective May 1, 2021 was “not approved by the requisite majority”.

Only 70.527 per cent of the votes were polled in favour of the resolution while 29.473 per cent of the votes were polled against the proposal. Ghosh is currently the non-executive Chairman of the company.

“These being special resolutions in nature, required a minimum of 75 per cent of the votes polled in favour of the resolution or a minimum of three times of the votes polled against the resolution,” said a regulatory filing by Ujjivan Financial Services.

A career banker, Ghosh was the erstwhile founder of the Ujjivan Financial Services and has served as its MD and CEO until January 31, 2017. He then took charge as the MD and CEO of Ujjivan Small Finance Bank Limited effective from February 1, 2017 and retired on November 30, 2019 on attaining the age of 70 years.

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Resolution to appoint Samit Ghosh as MD and CEO, Ujjivan Financial Services not approved

Banking & Finance

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A special resolution to appoint Samit Ghosh as Managing Director and CEO of Ujjivan Financial Services was not approved by the required majority of shareholders.

According to data with BSE, the special resolution to approve the appointment of Ghosh as MD and CEO of the company for a three-year period, effective May 1, 2021 was “not approved by the requisite majority”.

Only 70.527 per cent of the votes were polled in favour of the resolution, while 29.473 per cent of the votes were polled against the proposal.

Ghosh is currently the non-executive Chairman of the company.

Another special resolution to appoint Abhijit Sen as an independent director was also not approved by the requisite majority.

“These being special resolutions in nature, required a minimum of 75 per cent of the votes polled in favour of the resolution or a minimum of three times of the votes polled against the resolution,” said a regulatory filing by Ujjivan Financial Services.

The board had proposed to appoint Ghosh, the existing Non-Executive Director, who is over 70 years of age, as the MD and CEO of the company for a period of three years.

A career banker, Ghosh was the erstwhile founder of the Ujjivan Financial Services and has served as its MD and CEO until January 31, 2017. He then took charge as the MD and CEO of Ujjivan Small Finance Bank Ltd effective from February 1, 2017 and retired on November 30, 2019 on attaining the age of 70 years.

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