Bank on It: Universal Licence Likely to Drop by December, Says Sanjeev Nautiyal

Key Highlights

 

Ujjivan Small Finance Bank, under Managing Director and CEO Sanjeev Nautiyal, announced strategic progress toward securing a universal banking license, with expectations—per Nautiyal’s latest public statements—that final approval from the Reserve Bank of India (RBI) may arrive by December 2025.

 

The transition, one of the most consequential steps in the bank’s evolution, comes after Ujjivan formally submitted its application in February 2025, following months of preparatory work that included strengthening governance, IT infrastructure, and a diversified product pipeline.

 

Achieving universal bank status will entitle Ujjivan to a broader operational remit, enabling expansion into new customer segments and service lines, while also reducing regulatory constraints faced by small finance banks.

 

The Road to Universal Banking: Preparation and Milestones

 

Ujjivan’s pursuit of a universal banking license has been a multi-stage process. The Board of Directors approved the transition plan, which was then implemented through branch expansion, IT and digital upgrades, and development of a more robust business mix encompassing secured lending, microbanking, and new product lines.

 

The RBI mandates that applicants must demonstrate consistent profitability, strong asset quality (with net non-performing assets below 1% over two years), and a net worth above Rs 1,000 crore. Ujjivan qualifies on all parameters and recently diversified its loan book, with secured lending now comprising approximately 39% of its portfolio.

 

The formal application was submitted to RBI in February 2025 and is now under active regulatory consideration. The Standing External Advisory Committee is evaluating all submissions, with Ujjivan’s management voicing confidence in a favorable outcome by year-end.

 

Operational and Strategic Implications

 

If granted, Ujjivan’s universal banking license will:

 

Allow the bank to broaden its lending and deposit activities across segments, unfettered by the narrow lending criteria and geographical restrictions imposed on small finance banks.

 

Lessen regulatory requirements, such as lowering the priority sector lending target from 75% to 40% of total loans and reducing minimum capital adequacy ratios, freeing capital for growth.

 

Enable the launch of a wider array of products including credit cards, enhanced digital banking, corporate and foreign exchange services, and larger loan offerings to diverse customer segments.

 

Drive technological transformation, as Ujjivan has prioritized digital delivery, improved risk management, and robust compliance in anticipation of regulatory approval.

 

Nautiyal emphasized that the license would significantly strengthen Ujjivan’s mission of financial inclusion and allow the institution to provide “holistic banking and empowerment” to more aspiring Indians.

 

Current Performance and Governance

 

Despite a reported dip in net profits during Q3 of FY2025, attributed to increased provisioning for potential loan losses, Ujjivan remains fundamentally strong and has received regulatory clearances for foreign exchange services and further product diversification.

 

The bank’s leadership highlights ongoing investments in staff upskilling, digital infrastructure, and enhanced outreach, all designed to ensure a smooth transition once the universal license is approved.

 

Next Steps and Industry Impact

 

The banking sector is closely watching Ujjivan’s progress, as its upgrade could serve as a template for other small finance banks seeking to follow suit.

 

Ujjivan is preparing to mobilize resources rapidly post-approval, with a view to rolling out new segments and scaling operations across India in early 2026.

 

Conclusion

 

Ujjivan Small Finance Bank, spearheaded by Sanjeev Nautiyal, stands poised for a landmark transformation into a universal bank, with the RBI’s decision expected by December 2025. This development is set not only to redefine Ujjivan’s strategic trajectory but also to reshape the landscape of inclusive banking in India by delivering diversified products and services to a wider customer base, underpinning financial inclusion with greater operational muscle.

 

Sources: Economic Times, The Financial Express