Ujjivan Small Finance Bank Ltd.- Information Note

Source: RHP; *UFSBL commenced operations in Feb 2017 and thus reflects only 2 months of operations, ^on annualized basis

For additional information and risk factors please refer to the Red Herring Prospectus. Please note that this document is for information purpose only

Key Points

USFB has served 4.94 million customers as of September 30, 2019, and the bank considers its customers to be the most significant stakeholders at the core of its operations. USFB believes that customers prefer one source for multiple financial products and services, and hence, the bank’s spectrum of products and services coupled with allocating each customer with a relationship officer helps in customer acquisition and retention. The bank launched “Sampoorna Banking” in April 2019 that extends full banking services including education loans, vehicle loans, deposits, funds transfer facilities and distribution of insurance to families of their existing micro banking customers. On the liability side, they offer a variety of demand deposits and other services so that its customers can realize their savings goals. To constantly assess its customers’ requirements and feedback for the introduction of new products, the bank has a dedicated service quality department to focus on customer retention, customer protection and grievance redressal. Customer satisfaction scores of its Banking Outlets have improved from 77.11% in FY18 to 78.53% in FY 2019.

USFB has an established risk management framework to identify, measure, monitor and manage credit, market, liquidity, IT and operational risks. The bank has implemented credit management models such as decentralized loan sanctioning and stringent credit history checks. USFB continually uses technology and data analytics to manage credit risks and its in-house analytics team has developed a credit application scorecard to make informed decisions on lending. The bank’s effective credit risk management also reflects in its portfolio quality indicators such as robust repayment rates, stable portfolio at risk and low gross and net NPAs. As of September 30, 2019, its gross NPAs accounted for 0.85% of its gross advances, while its net NPAs accounted for 0.33% of its Net Advances. The bank’s GNPA was the lowest among the small finance banks in India, as of March 31, 2019 (Source: CRISIL Report). Its effective risk management framework is also evident from its low portfolio at risk ratio that was 1.49% and 1.64% as of March 31, 2019 and September 30, 2019, respectively.

Key Risk

Its loan portfolio contains significant advances towards micro banking segment, particularly through group loans. As of March 31, 2017, 2018, 2019 and September 30, 2019, advances in its micro banking business accounted for 97.50%, 92.55%, 84.67% and 79.22%, respectively, of its total Gross Advances (including securitization/ IBPC). They significantly depend on their micro banking business, particularly group loans, and any adverse developments in this segment could adversely affect the bank’s business, results of operations, financial condition and cash flows.

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