Image Source : BT Bazaar
Ujjivan Small Finance Bank Ltd has clarified recent reports regarding its capital-raising plans, confirming its intent to raise Rs 20 billion over the next 18 to 24 months via the Qualified Institutional Placement (QIP) route. The move is part of a broader strategic roadmap aimed at tripling its loan book, expanding its branch network, and strengthening its liability franchise as the bank positions itself for a potential transition to universal banking status.
The announcement, made by Managing Director and CEO Sanjeev Nautiyal on September 8, 2025, underscores Ujjivan’s confidence in its financial health and long-term growth trajectory, even as it awaits regulatory approval from the Reserve Bank of India for a universal banking licence.
Key Highlights From The Capital Strategy
- Ujjivan plans to raise Rs 2,000 crore through QIP over the next 18–24 months
- The capital will support branch expansion, technology upgrades, and product diversification
- The bank aims to grow its gross loan book to Rs 1 lakh crore by FY30, up from Rs 33,287 crore in FY25
- Deposit base is projected to reach Rs 1.2 lakh crore, with CASA share targeted at over 35 percent
- Capital adequacy remains strong at 22.8 percent, with Tier I capital at 21.2 percent as of Q1 FY26
Growth Roadmap And Business Objectives
Ujjivan’s five-year plan is anchored in aggressive expansion and operational efficiency. The bank intends to increase its branch count from 752 to 1,150, while doubling branch productivity and enhancing its secured lending portfolio. The focus areas include affordable housing, MSME finance, vehicle loans, gold loans, and agriculture credit.
- Secured loans will comprise 65 to 70 percent of the total book, up from the current 46 percent
- Annual loan book growth is expected to range between 20 to 25 percent
- Return on equity is targeted at 16 to 18 percent, with return on assets at 1.8 to 2.0 percent by FY30
- Net interest margin is projected to stabilize between 6 to 7 percent
Technology Investment And Operational Efficiency
Ujjivan is also investing heavily in digital infrastructure to support its growth and improve customer experience. The bank currently spends over Rs 250 crore annually on technology, with Rs 200 crore allocated to core operations and Rs 50 crore toward innovation and new initiatives.
- If granted a universal banking licence, Ujjivan will invest an additional Rs 500 crore in tech upgrades
- Plans include launching co-branded cards, issuing bank guarantees, and entering the forex segment
- The bank is focused on building scalable platforms to support future product lines and regulatory compliance
Regulatory Outlook And Licence Application
Ujjivan submitted its application for a universal banking licence to the RBI in February 2025. The bank has undergone multiple rounds of queries and clarifications, and expects a decision by the end of the year. The move follows similar transitions by peers such as AU Small Finance Bank, which recently received in-principle approval.
- Ujjivan’s management remains optimistic about securing the licence based on its track record and governance
- The bank has maintained consistent communication with RBI and is prepared for additional compliance requirements
- A successful transition would allow Ujjivan to broaden its product suite and compete with full-service banks
A Capital Raise With Strategic Depth
Ujjivan Small Finance Bank’s Rs 20 billion QIP plan is not just a fundraising exercise—it is a calculated move to fuel expansion, enhance resilience, and prepare for a new phase of banking operations. With strong capital buffers, a clear growth roadmap, and regulatory ambitions in sight, Ujjivan is positioning itself as a future-ready institution in India’s evolving financial landscape.
Sources: The Week, Financial Express, Angel One News
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