Ujjivan Small Finance Bank recently reported that the removal of India’s two highest banknotes had a negative impact on the quality of its assets and impaired its expansion plan to move from a microfinance firm to a small finance bank. Small banks are entities designed to provide A process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. While it is recognised that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both supply side and demand side. Supply side barriers stem from financial institutions themselves. They often indicate poor financial infrastructure, and include lack of ne... More to sections of the Indian economy not being served by other banks, such as small industries, farmers and unorganised sector entities.
Ujjivan Bank became a small bank last February, but according to CEO Samit Ghosh, growth was significantly slowed by the abrupt See Demonetised banknote. More of the Rs 500 and Rs 1000. Ujjivan’s gross non-performing assets (NPA) jumped from 0.28% of outstanding loans to 3.7% after the government’s move in November, and loans worth Rs 180 crore might have to be written off. Furthermore, Ujjivan was unable to disburse loans for a period of a few months.
Microfinance currently accounts for 85% of Ujjivan’s business but should come down to 50% in the next 5 years. The bank plans to expand its revenues by introducing insurance and home loans for low-income workers and small and medium companies.