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Directors’ Report
Dear Stakeholders,
On behalf of the Board of Directors (the “Board”) of Ujjivan Small Finance Bank Limited (the “Bank or Ujjivan”), it is our immense pleasure to present the 4th Annual Report of the Bank along with the Audited Financial Statements and Auditor’s Report thereon for the financial year ended March 31, 2020.
Overview anD State Of affairS Of the Bank
the financial year ended March 31, 2020, saw the Bank continuing its track of growth, expansion and profitability. the Bank closed the financial year on a good note, delivering healthy performance in asset and retail deposit businesses, maintaining a stable portfolio quality, resulting in bottom line numbers in line with the expectations. The business growth had moderated in the third and the fourth quarters of the financial year as the Bank had taken a cautious approach towards microfinance lending in certain pockets including Indian state of Assam, West Bengal, Odisha, Tamil Nadu, Maharashtra and parts of North-East India where delinquencies were higher due to natural calamities and other external factors. The Bank also took a measured approach towards its Micro and Small Enterprises (“MSE Business”) lending in certain stressed pockets and limited its exposure to Non- Banking Financial Companies (“NBFCs”) in its Financial Institutional Group (“FIG”) lending business. With the nationwide lockdown imposed to contain the spread of COVID-19 in the last week of March, 2020, the business volumes for the month were significantly affected.
overall business traction was good during the financial year, with a 28% Y-o-Y growth in the Assets under Management (AuM). the Bank witnessed significant Y-o-Y growth in its Housing Business (84%) and MSe Business (66%) coupled with sustained growth in microfinance book (17%). the FIG (Institutional) lending recorded remarkable growth (144%) while the personal loan business incepted last year gradually scaled up till Quarter 3 when the Bank decided to re- align its credit policies post a thorough portfolio quality review. the Bank also forayed into a new business segment – Vehicle Finance, starting with 2 wheeler loans for existing customers and staff in select locations.
In response to the ‘CoVID-19 – Regulatory package’ announced by Reserve Bank of India (“RBI”) on March 27, 2020, the Bank provided moratorium for all segments of customers, deferring the repayments for ~ 99 % of the loan accounts. The RBI dispensation granted on Non-
performing asset classification of the portfolio under repayment moratorium helped prevent any spike in credit costs. Also, the Bank made a prudential provision to the tune of `70 Crores in view of the CoVID-19 situation.
the Bank’s deposits book saw a 46% Y-o-Y growth, largely driven by a healthy growth in retail deposits which grew from 37% of total deposits in March, 2019 to 44% at the end of March, 2020, with good traction in Current Account Saving Account (“CASA”). Bank’s CASA balances (as a % of total deposits) increased from 11% to 14%.
Committed to providing a comprehensive suite of products and services to its customers, the Bank expanded its bouquet of offerings during the year under review. Kisan pragati Card was launched to primarily cater to the financing needs of customers engaged in agriculture and allied activities and Business Edge product, targeted at the formal segment, was launched for MSE customers. Privileged Savings Account product with additional features and Rupay platinum card for business and current account customers were launched to diversify the deposit product offerings. the Bank initiated Goal based deposits for the microfinance customers and their families. The Bank also launched digital saving and term deposit products for better customer convenience and efficient onboarding besides rolling out Internet Banking, UPI and QR code based payment solutions during the year.
The Bank launched a digital evangelism program to increase adoption of digital channels among its customers. Neighbourhood cash collection points were piloted and centre meeting deposits were launched for Micro Banking customers and their families to promote active usage of the accounts by providing convenient alternative channels for transactions. For better customer convenience, the Bank’s mobile banking application has been developed in 9 (Nine) languages. The number of customers using digital services has grown by 3 (three) times in the past one year with digital transactions constituting 25% of overall transactions as against 8% in the previous year.
Duringtheyearunderreview,theBank’stotalcustomer base grew by 17% Y-o-Y to 54.4 lakhs while Deposit customers increased by 68% to 47.1 lakhs.
The Bank operationalised 101 Banking Outlets (“BO”) including 24 in unbanked Rural Centres (“uRC”). By the end of the year under review, the Bank had converted all its asset centres into banking outlets, complying with the requirement of converting the erstwhile Micro Finance
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