RBI Rejects Ujjivan SFB Licence Bid: More Details Inside

Stocks of Ujjivan Small Finance Bank faced selling pressure on Wednesday, 15 April, after India’s central bank rejected its application for a universal banking license. The company’s shares fell as much as 6% on Wednesday morning, contrary to the overall market trend, which showed the BSE Sensex rising by more than 1.5%.

The share price slipped to an intraday low of ₹56.75 on the BSE, compared to its previous close of ₹60.34.

Around 12:40 PM, Ujjivan Small Finance Bank shares were still down about 3.4%, hovering near ₹58.25, as investors reacted to the regulatory update.

What Led To RBI’s Decision?

The RBI has not rejected the proposal outright but has asked the bank to come back later. The main concern is the composition of its loan book. While Ujjivan has started expanding beyond its core segments, the regulator feels the shift is not yet strong enough.

In its filing, the bank said the RBI acknowledged its recent efforts but pointed out that more visible progress is needed. For now, the application has been returned, with advice to reapply once the loan mix becomes more balanced.

Ujjivan had applied for a universal bank licence in February last year, in a move that would have allowed it to widen its services and compete more directly with larger banks.

To qualify, lenders are expected to meet several conditions, which include a consistent performance track record, adequate capital, controlled bad loans, and a diversified lending portfolio.

A Look At The Bank’s Recent Performance

The latest business updates show that the bank has been growing steadily. Its gross loan book stood at ₹40,655 crore in the March quarter, up 26.6% from a year earlier.

Deposits also moved up, rising over 21% to ₹45,661 crore. In its recent quarterly result, the bank reported a net profit of around ₹186 crore, a jump of more than 70% year-on-year.

Core income remained strong as well, with net interest income touching ₹1,000 crore. Asset quality has stayed under control, with gross NPA at 2.39% and net NPA at 0.57%.

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How Is The Stock Positioned Now?

Even with the latest drop, the stock has not lost all its recent gains. It is still up roughly 12% over the past month and about 7% higher so far this year.

For now, the focus shifts back to execution. The bank will need to show clearer diversification in its loan book before making another attempt at securing a universal banking licence.

Sources:

Livemint

Moneycontrol