Tag: ujjivan sfb

Nitin Chugh resigns as MD and CEO of Ujjivan SFB for personal reasons, BFSI News, ET BFSI

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Nitin Chugh, the Managing Director and Chief Executive Officer of Ujjivan Small Finance Bank, has resigned from his position.

“We hereby inform you that the bank has received a letter dated August 18, 2021 from Mr Nitin Chugh tendering his resignation from the position of Managing Director and CEO of the Bank w.e.f. close of business hours on September 30, 2021,” Ujjivan SFB stated in its BSE filing on August 19.

The resignation will come into effect from September 30, 2021,, the lender said in a regulatory filing on August 19.
Chugh has confirmed, in his resignation letter, that he is resigning due to personal reasons and “there are no material reasons”, the bank said.

Chugh’s tenure as Director of the bank, which is co-terminus with his tenure as Managing Director and CEO, would also end after his resignation comes into effect. Consequently, he shall also cease to be Key Managerial Personnel of the Bank in terms of Section 203 of the Companies Act, 2013,” the lender said.

The bank said the filing that its board has taken note of Chugh’s resignation letter and has appreciated his valuable contribution to the board and the bank during his association. “The board wishes him the very best in his future endeavours”, it added.



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After reverse merger, promoter holding in Equitas, Ujjivan SFBs to fall to zero, BFSI News, ET BFSI

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Taking a cue from IDBFC First Bank, Equitas Small Finance Bank and Ujjivan SFB plan to reverse merge the holding companies into the SFB, thereby bringing down the promoter shareholding to zero.

In case of Ujjivan SFB, promoter shareholding, or the shareholding by the non-operating holding comapbny was 83.32 per cent as in June 2021 while in the case of Equitas, the NOFHC held 81.98 per cent of the bank in March this year.

RBI rules stipulate that the SFB promoters must bring down their shareholding to 40 per cent in five years.
The reverse merger, in this case, brings down the promoter shareholding to zero as post merger, the holding companies would cease to exist.

Equitas SFB

As per the SFB licensing guidelines of RBI, a promoter of SFB can exit or to cease to be a promoter after the mandatory initial lock-in period of five years (initial promoter lock-in) depending on RBI’s regulatory and supervisory comfort and SEBI regulations at that time.

In case of Equitas Small Finance Bank (the bank), the initial promoter lock-in for the company expires on September 4, 2021.

Hence, the bank had requested RBI if a scheme of amalgamation of the company with the bank, resulting in exit of the promoter, can be submitted to RBI for approval, prior to the expiry of the said five years, to take effect after the initial promoter lock-in expires.

RBI vide its communication dated July 9, 2021, to the bank has permitted the bank to apply to RBI seeking approval for scheme of amalgamation.

RBI has also conveyed that any ‘no objection’, if and when given on the scheme of amalgamation, would be without prejudice to the powers of RBI to initiate action, if any, for violation of any licensing guidelines or any terms and conditions of license, or any other applicable instruction, it added.

The share exchange ratio would result into each shareholder of the transferor company, Equitas Holdings, getting 226 equity shares of the transferee company, Equitas SFB, for every 100 shares held by them in the holding company.

Holding company

The RBI had mandated a holding company structure to ring-fence the bank from other financial services businesses of the group. A reverse merger is beneficial to the shareholders of IDFC as it would remove the holding company discount. While the 2013 RBI rules mandated it, in the 2016 guidelines for “on-tap” bank licensing, the RBI had not sought requirement of holding company for promoter if there are no other group entities.



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Ujjivan SFB plans to apply for reverse merger by early November

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Ujjivan Small Finance Bank is likely to apply to the Reserve Bank of India for reverse merger with Ujjivan Financial Services by November this year.

“The RBI has clarified to the Association of Small Finance Banks that we can apply three months prior to completing five years of business,” said Nitin Chugh, Managing Director and CEO, Ujjivan SFB, adding that this would mean the bank can apply by early November.

It is hopeful that the process may be completed within a 12 month period.

“Instead of applying in February of next year, we will get to apply in November this year. So, we will easily be able to save three months,” Chugh further said.

In a stock exchange filing in July, Ujjivan SFB had said it would be initiating necessary steps for the amalgamation of Ujjivan Financial Services with the bank in accordance with applicable laws and guidelines.

Meanwhile, with a recovery in credit demand and improvement in collection efficiencies, Chugh said the bank is cautiously optimistic.

“We are seeing a strong demand in housing, affordable housing dedicated to micro small enterprises. in microfinance, personal loans,” he said.

The bank is retaining its credit growth target of 20 per cent to 25 per cent this fiscal but Chugh said it may be closer to 20 per cent, given the impact of the second wave of the pandemic.

The lender is also witnessing repayment by customers from July onwards and expects NPA recoveries to improve.

“Collection efficiencies improved to 93 per cent in July compared to 78 per cent in June,” he said, adding that the second quarter of the fiscal is looking quite optimistic on business as well as collection.

The bank had reported a standalone net loss of Rs 233.48 crore in the quarter ended June 30, 2021 with gross non performing assets rising to 9.79 per cent of gross advances.

The lender is also planning to scale up its gold loan business this fiscal and expand it to 25 branches this quarter. In the current fiscal, it plans to take the gold loan offering to 100 branches.

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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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Ujjivan SFB partners with LoanTap

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Ujjivan Small Finance Bank has partnered with digital lender LoanTap to provide personal loans to salaried professionals.

“This is part of Ujjivan SFB’s API banking initiative, through which over 150 APIs are available offering fast and secure tie-ups for digital lending and digital liabilities, payments to fintechs,” it said in a statement on Tuesday.

This collaboration aims to extend the bank’s services to its customers via LoanTap’s fast and convenient platform, it further said.

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Ujjivan SFB ventures into supply chain finance with Progcap, BFSI News, ET BFSI

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Ujjivan SFB has tied-up with Progcap for end-to-end digitisation of invoice-based financing of MSMEs for their small tenor working capital requirements. This ties-up the bank’s venture into supply chain financing and will fund dealers, sub-dealers against purchases made from recognised brands through short-term overdraft facility.

The bank said, “The entire lending process, right from the lead generation, lead screening, loan sanctioning, document execution and customer on-boarding and repayments has been digitized through Progcap’s data-driven tech platform.”

Rajiv Kumar Pathak, Business Head – Medium and Small Enterprise, Ujjivan Small Finance Bank said, “This is a win–win arrangement for all stake holders in the MSME business ecosystem i.e. bank, fintech partner, buyers and suppliers. The customer gets working capital in the form of supply chain finance against the invoices raised along with freedom to clear dues with regular cash flow. Digital on-boarding gives us an access to larger geography where we don’t have direct reach through USFB branch network.”

Dheemant Thacker, Head – Digital Banking, Ujjivan Small Finance Bank said, “Driving business through fintech partnerships using Ujjivan Small Finance Bank’s full-stack API Banking platform is at the core of our digital strategy. With our first such partnership in the SME space – Progcap, we are able to offer fully digital, innovative lending services to small businesses and partner with them in their growth. In a short period of time, we have been able to offer supply chain financing to a significant number of businesses and will continue to ramp up our efforts to support these businesses as they battle the uncertainties of the current pandemic.”

Pallavi Shrivastava, Co-Founder, Progcap said, “Supporting MSMEs linked with large corporates is core to what we do at Progcap. We are excited to partner with Ujjivan Bank in this journey. Combined with Progcap’s industry first product that uses heavy data driven underwriting and Ujjivan’s digital first approach, we aim to offer this product to a large number of underserved MSMEs. Progcap is working with similar technology driven lending partners in furthering its mission to support millions of small businesses access credit for the first time.”



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Q1 is challenging but we expect 3 good quarters this fiscal: Ujjivan SFB

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Even as the second wave of Covid-19 infections affects collection efficiencies and hampers credit demand, Ujjivan Small Finance Bank is hopeful of a recovery by June-end.

“We are hopeful that now that cases have started to decline, the situation should become normal in another 30 days or by the end of June, and there would be a gradual restoration of business activities, including in rural areas,” said Nitin Chugh, Managing Director and CEO, Ujjivan SFB.

“This quarter is going to be challenging but we are hopeful that as things return to normal, hopefully by the end of the quarter, we should have three good quarters in the year,” he told BusinessLine.

The SFB reported 94 per cent collection efficiency in March this year, though it has declined to 89 per cent in April 2021.

“May collection efficiency is lower than that in April. We will be able to see some recovery by the month-end,” Chugh said, but added that the level of infections amongst customers and the bank’s staff is high compared to the last time.

Rising infections and localised lockdowns have also impacted credit demand.

“We are cautious in credit disbursement, but there has also been a collapse of demand, people are not willing to meet anybody and are not doing business,” he noted.

The bank’s disbursement for the fourth quarter of 2020-21 stood at ₹4,274 crore as against ₹3,254 crore a year ago.

On concerns about asset quality, Chugh said Ujjivan SFB did not exect gross non-performing assets to come down and it was well within estimates.

The bank’s GNPA shot up to Rs 1,070.6 crore or 7.07 per cent of gross advances as on March 31, 2021 as against 0.97 per cent on March 31, 2020.

“Our proforma GNPA for December was 4.84 per cent. The accounts which were already stressed by that time did not recover fully well, we offered restructuring to a part of the better quality portfolio but there were customers who were unable to pay,” he said, adding the lender had also highlighted areas such as Maharashtra, West Bengal, Assam.

“In our estimate, GNPA was not expected to come down, it is well within our estimate. If we had resorted to write-offs, it would have been in the range of 5 to 5.5 per cent,” he said.

The bank is also looking to launch gold loans as well as credit cards on a white label basis this fiscal.

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Ujjivan SFB partners with NIRA to provide personal loans, BFSI News, ET BFSI

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Ujjivan Small Finance Bank announced its collaboration with fintech NIRA as a part of its strategy of leveraging its API Banking platform for fintech partnerships.

Through this partnership, salaried customers can apply for a Personal Loan by using the NIRA app which is available in the play store.

NIRA is a Bangalore based fintech that helps to fund the salaried class, starting at incomes as low as Rs. 15,000 per month. This partnership will help Ujjivan SFB to on-board customers for Personal Loans.

Dheemant Thacker, Head – Digital Banking, Ujjivan Small Finance Bank said, “A robust API Banking framework to enable fintech partnerships such as NIRA is at the core of our digital strategy and helps augment our digital expansion. Collaboration with fintechs like NIRA plays a vital role in the financial ecosystem, especially to serve the mass market. Such partnerships will help us to reach out to more customers with better products and offerings with ease and convenience.”

Manish Kumar Raj, Business Head – Personal Loan, Ujjivan Small Finance Bank said, “We have been actively pursuing this partnership and many others in our quest to serve every segment of customers. NIRA with their very diversified approach gave us this opportunity and we hope this will be a successful collaboration.”

Rohit Sen, CEO and cofounder at NIRA said “After navigating the COVID crises extremely well, we’re now refocusing on our mission to bring credit access to the urban mass market in India.”

“We’ve developed strong expertise in credit scoring and collecting from this group, and in collaboration with banks such as Ujjivan SFB, we can deliver the right product in a timely manner to this segment” added Rohit.

Ujjivan SFB selects fintechs for partnership which identify and solve specific needs of this segment at large. The bank also has an extensive set of APIs for faster integration with fintechs and start-ups.

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Ittira Davis resigns as MD and CEO of Ujjivan SFB

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Ittira Davis, Managing Director and CEO of Ujjivan Small Finance Bank Limited, has resigned to take up a director’s role on the board of the company.

In a regulatory filing to exchanges, the company said: “With the resignation of Davis, company has appointed Samit Ghosh, the existing Non-Executive Chairman as MD and CEO of the company, with effect from May 1,and his appointment is to be effective only on receipt of prior approval of the shareholders by way of special resolution since he is over 70 years of age.”

The company has given the following reason for resignation of Davis: “Having regard to a few recent board-level changes in Ujjivan Small Finance Bank Limited, the NRC and the board of the company, unanimously were of the view that Ittira Davis, the existing MD and CEO, who is a veteran banker with over 40 years of banking experience and having been associated with Ujjivan since 2015, wherein he was instrumental in the formation and transition of the bank, will add further value, if appointed to the board of the bank. He meets all the criteria of our various stakeholders and is held in high esteem by the employees, investors, partners and regulators and will be able to provide guidance to the bank board and its management.”

“To facilitate the whole process and to avoid any probable conflict, Ittira Davishas decided to relinquish his existing position of the MD and CEO of UFSL to take up the Non-Executive Directorship role at the bank for which a separate disclosure will be made by the bank in due course, once his appointment is considered in its ensuing board meeting. Accordingly, the board at its meeting held today has accepted the resignation of Ittira Davis from the post of MD and CEO of the company w.e.f. today March 12(close of business hours). He has confirmed that there are no other material reasons for his resignation from the board of our company,” company’s note added.

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