Image Source : Ujjivan Small Finance Bank
Ujjivan Small Finance Bank (Ujjivan SFB) has unveiled its strategic vision to scale its gross loan book to an impressive Rs 1 lakh crore by the fiscal year 2030. This ambitious target is part of a broader plan to transform the bank into one of India’s leading mid-sized lenders, supported by diversification into secured lending, expansion of its branch network, and enhanced product offerings.
Key Highlights Of Ujjivan’s Growth Strategy
Current gross loan book stands at approximately Rs 33,300 crore (Q1 FY26), up significantly from Rs 7,500 crore in FY18
Target to triple the loan book to Rs 1 lakh crore by FY30, sustained by a 25% annual loan growth trajectory
Planned expansion of branches from 752 to around 1,150 by FY30 to deepen market penetration
Focus on increasing secured loans’ share of the portfolio from 46% to 65-70%, driven by growth in affordable housing, micro loan against property, MSME lending, vehicle and gold loans, and agricultural finance
Aiming to increase the CASA ratio from around 25% to 35%, thereby strengthening low-cost deposit base
Plans to reduce cost-to-income ratio to 55% and enhance return on assets (RoA) to 1.8-2.0% and return on equity (RoE) to 16-18%
Target to raise ₹2,000 crore over the next 18-24 months via Qualified Institutional Placement (QIP) to fund expansion
Awaiting approval for a universal banking license from the Reserve Bank of India, expected by December 2025, which would unlock broader banking activities
Strategic Shift Towards Secured Lending
A key pillar of Ujjivan’s roadmap is the calibrated transition from predominantly unsecured microfinance loans to a diversified, secured portfolio. This shift is expected to mitigate risks associated with microfinance, improve asset quality, and enhance earnings stability. Secured credit products are targeted to grow at about 30% CAGR, reflecting higher yielding and lower risk exposures.
Branch Network Growth And Digital Transformation
Physical expansion through new branches will complement technological investments aimed at digitizing operations, improving customer experience, and boosting operational efficiency. Ujjivan intends to nearly double average liabilities per branch to Rs 102 crore, supported by digital initiatives including enhanced mobile banking and fintech collaborations.
Product Diversification And Cross-Selling
The bank plans to leverage its expanding customer base to cross-sell financial products such as IPO services via ASBA, mutual funds, insurance, remittances, and co-branded credit cards. Mid-corporate lending is also on the roadmap to deepen its presence beyond retail and microfinance segments.
Financial Health And Capital Adequacy
With a Capital to Risk Weighted Assets Ratio (CRAR) of 22.8% and Tier 1 capital ratio of 21.2%, Ujjivan remains well-capitalized to support its growth plans. The focus on margin management aims to sustain net interest margins (NIMs) around 6-7% even as the loan mix evolves.
Management’s Perspective And Market Implications
MD and CEO Sanjeev Nautiyal views the next five years as a high-growth phase, emphasizing strong execution capabilities demonstrated since the bank’s transition from NBFC to SFB. The recent roadmap announcement has been well-received by investors, reflected in a near 6% surge in Ujjivan SFB’s share price, highlighting bullish market sentiment.
Challenges And Outlook
While growth ambitions are robust, challenges such as macroeconomic uncertainties, regulatory scrutiny, and competitive pressures within the small finance bank sector remain relevant. The success of Ujjivan’s plan will hinge on prudent risk management, maintaining asset quality, and agile adaptation to market dynamics.
Conclusion
Ujjivan Small Finance Bank’s detailed roadmap to hit Rs 1 lakh crore loan book by 2030 demonstrates a strategic blend of product diversification, branch expansion, and capital augmentation. With a clear focus on transitioning to secured lending and strengthening liabilities, the bank is poised to emerge as a prominent player in India’s banking landscape. Investors, analysts, and stakeholders will keenly monitor the bank’s progress as it scales new heights in the coming years.
Sources: The Hans India, Moneycontrol, Economic Times, Business Standard, Ujjivan Small Finance Bank official filings
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