Ujjivan Small Finance Bank, a wholly owned subsidiary of Ujjivan Financial Services Ltd. is targetting 20-30 percent year-on-year growth for the next five years, said Managing Director and Chief Executive Officer Samit Ghosh.
Ghosh sees small finance banks converting into large mass market banks over time. “That is a market that is currently underserved, which was supposed to be served by the public sector banks but that market is wide open and that is the market we will capture,” he told BloombergQuint in an interview.
The lender has so far converted 108 of its 450 microfinance branches into small finance banks and expects savings accounts to constitute 20 percent of its deposit base in the next two years.
We received a scheduled bank status a couple of months back, due to which our cost of raising funds has declined by nearly 2 percent. We are now focused on replacing the expensive old-term borrowings with wholesale and cash deposits at a lower cost and slowly build up the retail deposit base.Samit Ghosh, MD And CEO, Ujjivan Small Finance Bank
Going forward, the affordable housing and MSME sectors are expected to grow faster than the microfinance business for the bank. Ujjivan is not looking to de-emphasise the that portfolio but said it will come down to 50 percent of its overall business.
No Merger Plans
Ghosh put to rest speculation around Ujjivan Small Finance Bank merging with Kotak Mahindra Bank Ltd., there is no alignment of purpose and target market between small finance banks and successful private banks. “It’s fake news,” he quipped.
The question of merger does not arise, because there is no alignment of purpose and target market between small finance banks and large private banks. Bharat Financial Inclusion Ltd. merged with IndusInd Bank Ltd. as the scope of operations as just a non-banking financial company or microfinance institution is limited. That’s not the case with larger small fin banks like Ujjivan.Samit Ghosh, MD And CEO, Ujjivan Small Finance Bank
Watch the full interview here.