Microfinance major Ujjivan commences its small finance bank operations

Image: Mukesh Gupta / Reuters

India-listed microfinance major Ujjivan Financial Services Ltd has begun the process of restructuring its business to becoming a small finance bank, following the Reserve Bank of India’s approval of its bank licence in September 2015. The new banking entity Ujjivan Small Finance Bank (Ujjivan SFB) began operations with effect from February 1, 2017.

Ujjivan SFB has launched five pilot branches, in Bengaluru, that will provide the full range of bank service offerings. Over the next one month the bank will test its technology, channels, people and processes before rolling out its small finance bank services to cover 457 branches across 24 states.

“Ujjivan SFB would offer a no minimum balance savings bank account with the full range of banking services and benefits using the latest technology to the unserved and underserved customers. We will provide a whole host of benefits such as door-step and paperless banking, mobile, internet and phone banking, access to biometric ATMs and Aadhar enabled debit cards. These benefits are normally available only to premier customers of commercial banks,” says Samit Ghosh, managing director and CEO of Ujjivan SFB.

Ghosh, a veteran banker, founded Ujjivan in 2005 as a non-banking financial company (NBFC) with a mission to empower the low income groups in the country, who did not have access to the formal banking system. With a customer base of 3.5 million and having a high customer retention rate, Ujjivan was among a few social impact success stories in the microfinance sector, in India.

Ujjivan SFB will offer rates of interest on fixed deposit and recurring deposit in the range of 5.5 percent to 8 percent. “The deposit and savings products of Ujjivan SFB have been designed and developed based on comprehensive research and in-depth understanding and so also to fulfil comprehensive financial inclusion objectives amongst the segments we aim to serve,” added Ghosh. Customers would also get to avail of a total of six free transactions in any other bank’s ATM network, making this one of the highest free transactions offered by any bank, currently.

“Our primary goal is to reach out to the larger unserved and underserved populace through our unique bank, and provide them with easy-to-use and access banking services where they are treated as valued customers,” says Ghosh. In May last year, Ghosh successfully got Ujjivan listed on the Indian bourses at an issue price of Rs 210 per share. The Rs 885-crore initial public offering had been oversubscribed nearly 41 times. On Monday, the company’s share price was trading at Rs 434.60 apiece, up 107 percent over its issue price.