Kolkata: The Reserve Bank of India (RBI) has returned Ujjivan Small Finance Bank's application for voluntary transition into a universal bank saying that the bank needs to diversify its portfolio.
The central bank has also advised Ujjivan to consider applying again after demonstrating a diversified asset pool.
"The RBI through their aforesaid letter took note of the bank’s recent efforts toward diversification of its loan portfolio. However, they were of the view that there is scope for progress in this area," Ujjivan said Monday in a stock exchange notice.
The regulator returned the application Monday.
Ujjivan's gross loan portfolio stood at Rs 40,655 crore at the end of March, and nearly 52% of the assets include unsecured loans. The share of unsecured loans was 56.5% a year back.
"The application for transitioning to a universal bank was submitted as part of the bank's long-term growth plans. Ujjivan will continue to embark on the path of diversification and will resubmit the application in due course, keeping RBI's guidance in view," the bank said in a statement.
Although the regulator wants universal bank applicants to have diversified portfolios among other financial criteria such as bad loan ratio and profitability, it did not spell out specific details related to diversification of loans in its guidelines for making an application.
A little over 36% of the bank's total portfolio are loans given to joint liability group members as of March 2026. The remaining part of the unsecured loans were given as individual loans.
Housing loans contributed about 26% of the total business. The bank also offers loans to small businesses (MSME loans), vehicle loans, agri loans and gold loans.
Earlier, in October last year, RBI also returned the universal banking application by Jana Small Finance Bank.
Out of three universal banking applicants in the small finance bank space, only AU Small Finance Bank received an in-principle licence so far.
A universal banking license would provide small finance banks some relief in terms of capital adequacy and priority sector lending requirements. The capital adequacy ratio after such a transition would come down from the present 15% norms while the priority sector lending target would be lower at 40% instead of 60%. Then the norm of having at least 50% of the loan portfolio in loans less than Rs 25 lakh does not apply for bigger banks.
The central bank has also advised Ujjivan to consider applying again after demonstrating a diversified asset pool.
"The RBI through their aforesaid letter took note of the bank’s recent efforts toward diversification of its loan portfolio. However, they were of the view that there is scope for progress in this area," Ujjivan said Monday in a stock exchange notice.
The regulator returned the application Monday.
Ujjivan's gross loan portfolio stood at Rs 40,655 crore at the end of March, and nearly 52% of the assets include unsecured loans. The share of unsecured loans was 56.5% a year back.
"The application for transitioning to a universal bank was submitted as part of the bank's long-term growth plans. Ujjivan will continue to embark on the path of diversification and will resubmit the application in due course, keeping RBI's guidance in view," the bank said in a statement.
Although the regulator wants universal bank applicants to have diversified portfolios among other financial criteria such as bad loan ratio and profitability, it did not spell out specific details related to diversification of loans in its guidelines for making an application.
A little over 36% of the bank's total portfolio are loans given to joint liability group members as of March 2026. The remaining part of the unsecured loans were given as individual loans.
Housing loans contributed about 26% of the total business. The bank also offers loans to small businesses (MSME loans), vehicle loans, agri loans and gold loans.
Earlier, in October last year, RBI also returned the universal banking application by Jana Small Finance Bank.
Out of three universal banking applicants in the small finance bank space, only AU Small Finance Bank received an in-principle licence so far.
A universal banking license would provide small finance banks some relief in terms of capital adequacy and priority sector lending requirements. The capital adequacy ratio after such a transition would come down from the present 15% norms while the priority sector lending target would be lower at 40% instead of 60%. Then the norm of having at least 50% of the loan portfolio in loans less than Rs 25 lakh does not apply for bigger banks.
