Mumbai, April 13: The Reserve Bank of India has returned the universal banking licence application filed by Ujjivan Small Finance Bank (SFB) on the grounds that the lender has not sufficiently diversified its asset book to qualify for it, according to an exchange filing.
“The RBI, through their aforesaid letter, took note of the Bank’s recent efforts towards diversification of its loan portfolio. However, they were of the view that there is scope for progress in this area. Therefore, the RBI has returned the above-mentioned application and advised the Bank to consider applying again after demonstrating a diversified loan portfolio,” the notice said.
This is the second application by a small finance bank that the RBI has “returned” in the recent past.
The Reserve Bank encourages small finance banks to diversify their loan portfolios to reduce heavy reliance on high-risk, uncollateralised microfinance, which often suffers from high non-performing assets during economic downturns. By reducing priority sector lending requirements and encouraging diversification into retail, vehicle, and SME loans, the RBI aims to improve asset quality, stabilise earnings, and prepare SFBs to become resilient universal banks. (IANS)
