To diversify beyond microfinance, Ujjivan Small Finance Bank is focusing on housing finance and loans to micro and small enterprises, chief operating officer Ittira Davis told Shritama Bose. The bank plans to complete its branch rollout by the end of FY18, he added. Edited excerpts:
How was 2017 for the bank?
In 2017, we have commenced banking operations in 20 states with over 115 branches currently operational. We have observed good interest from both existing MFI customers and open market customers in terms of deposit generation. We also received scheduled bank status this year, which has enhanced the market acceptability of the bank to garner institutional deposits at a competitive price and certificate of deposits. Our deposit base stood at Rs 1,349 crore at the end of September.
What is the extent of recovery from the days of demonetisation?
Demonetisation was a challenge that the entire microfinance industry had to face. We set up fully dedicated recovery teams at branches in affected states to optimise overdue collections. In addition, we had specialised collection teams focussing on overdues of over 90 days. This yielded good results for us over a period of time, thereby stabilising the situation. Our collection efficiency for new business from January 2017 is back to normal which stands at 99.7%. On the business front, we have seen normalcy returning in terms of our disbursements across states.
What has been the progress on diversification beyond microfinance?
We have about four million microfinance customers, who will now have access to a full range of financial services. We have invested heavily in digital technology, which will make banking convenient for all. We are offering services such as doorstep account opening on a wireless handheld device, internet and mobile banking, biometric ATMs, form-free banking and much more. We are also focusing a lot on the micro and small enterprises sector and the housing finance business. We expect to see a large growth in that portfolio, relative to our portfolio in microfinance. Currently, about 85% of our portfolio is in microfinance, which, over the years, may be only 50% of our business. The rest would be MSE and housing finance.
Any updates on the ramp-up of the liability franchise?
We have segmented our liability customers based on the customer profile for an efficient and effective service. In the retail space, the focus is on mass market with specific attention to unserved and the underserved. All our existing loan customers are being on-boarded into the liabilities banking relationship through an integrated programme involving financial literacy, assisted banking and account opening through a simplified process. New customers are being acquired through specialised teams operating out of the bank branches.
We shall follow a three-pronged strategy for building our liability business. The first priority shall be sourcing higher-ticket institutional and corporate deposits to rapidly scale up our deposit franchise. The second priority is garnering deposits from existing customers bsy offering them a bouquet of liability products. Our third focus segment will be on open-market customers, especially the unserved and the underserved who are essentially outside the banking system currently.
What are your targets for 2018?
We believe that technology will be a key enabler in providing access to banking. Among our technology initiatives for 2018, we plan to roll-out Digi buddy programme, where we will deploy 500 tech-friendly graduates across our branches to hand-hold customers and educate them about operating the digital platform. We are targeting branch rollout completion by end of FY18. This will provide a boost for deposit gathering.