Global research firm Jefferies stated that Ujjivan Small Finance Bank’s collection in microloans is stabilising and provisioning was expected to come-off, going forward. Jefferies had hosted Nitin Chugh, MD and CEO of Ujjivan SFB, at its India Midcap Summit. Chugh also said that the company’s share of microloans will fall to 50 percent of the mix (now, it’s 73 percent) in the medium term that Ujjivan Small Finance Bank was open to mergers and acquisitions.

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Chugh added further that recent deposit rate hikes will expedite the growth of retail liabilities and reverse merger with its holding company was a priority.

The Jefferies report stated that the company’s collections in the microloan portfolio have stabilised at 92 percent. These collections are stable in key states such as West Bengal, where elections are due in April and May.

With the management remains committed to its goal of diversifying the portfolio towards more secured products, the company expects microloans to come down to 50 percent of the mix in the medium term.

Ujjivan Small Finance Bank recently raised its interest rates on savings deposits to 7 percent for balances less than Rs 1 lakh. The management expects this to further help build the deposit franchise.

Ujjivan Small Finance Bank is also awaiting clarity from the Reserve Bank of India (RBI) on the reverse merger with its holding company. The internal working committee report of the RBI proposed allowing this after completion of five years of operations as a small finance bank — which is February 2022 for Ujjivan Small Finance Bank. However, the committee’s recommendations need to be approved by RBI. The company is willing to apply for a full-fledged banking license once this goes through.