Ujjivan Small Finance Bank (USFB) has made a significant move by applying for a universal banking licence, paving the way for it to become a full-fledged commercial bank. This strategic decision aligns with the bank’s plan to expand its financial services, increase regulatory flexibility, and strengthen its position in the banking sector.
USFB has met the RBI’s eligibility criteria, which include being a listed entity, having a net worth of at least ₹1,000 crore, maintaining a net non-performing asset (NPA) ratio of less than 1% for two consecutive financial years, and having a diversified loan portfolio. The bank’s focus has been on serving underserved and unbanked sections of society, and it has expanded its portfolio to include savings accounts, fixed deposits, microloans, housing loans, and small business loans.
The shift to a universal bank will enable USFB to offer a wider range of services, including corporate banking and larger loan products. This move will provide customers with access to more banking products beyond retail and microfinance, and signal growth potential for investors.
This development follows a growing trend of small finance banks transitioning to universal banks to expand their operational capabilities. AU Small Finance Bank is another example of a small finance bank that has applied for a universal banking licence. USFB’s move has been a long-term vision to strengthen its position in India’s banking sector, as announced by its Managing Director Sanjeev Nautiyal in November 2024.
The application has been formally submitted to the Reserve Bank of India, marking a significant milestone in USFB’s journey towards becoming a full-fledged commercial bank. This transition will not only expand USFB’s service capabilities but also increase its competitive edge in the market.