Breaking Down Ujjivan Small Finance Bank Limited Financial Health: Key Insights for Investors

From its RBI-backed launch on 1 February 2017 to an IPO that was oversubscribed 166 times in December 2019, Ujjivan Small Finance Bank has rapidly evolved into a data-driven challenger in Indian banking: its equity base stood at ₹6,323.20 crore (2025) with a comfortable capital adequacy ratio of 23.90% (overall) and 22.10% (Tier‑I) as of December 31, 2024, while ratings of AA-/A1+ (CARE/CRISIL) underscore financial stability; the bank now operates some 766 branches across 334 districts and 26 states/UTs, serves around 97 lakh customers through 754 branches and 613 ATMs, and runs a diversified balance sheet with a gross loan book of ₹33,287 crore and deposits of ₹38,619 crore as of June 30, 2025 (CASA 25.6%), generates revenue streams-total income rose to ₹7,201 crore in FY 2024‑25 with NII up 19% YoY to ₹941 crore-supports financial inclusion via microloans, housing and MSME lending, multilingual ATMs and the voice-visual-vernacular app Hello Ujjivan, and is positioning for scale through an AD-I FX licence (2024), a 2025 application for a universal banking licence, and an FY30 roadmap targeting deposits of ₹1.2 trillion and a ₹1.0 trillion gross loan book.

Ujjivan Small Finance Bank Limited (UJJIVANSFB.NS): Intro

• Commenced banking operations: 1 February 2017 (RBI approval to convert Ujjivan Financial Services into a Small Finance Bank).
• Scheduled Bank status: Granted in August 2017 by the Reserve Bank of India.
• IPO (December 2019): Oversubscribed 166 times.
• Reverse merger: Ujjivan Financial Services approved a reverse merger into Ujjivan Small Finance Bank in 2022.
• AD-I Licence: Authorised Dealer Category 1 licence granted by RBI in 2024 (foreign exchange services enabled).
• Universal bank application: Applied to the RBI for a universal banking licence in 2025.

• Interest income: Core margin from retail loans - micro, small business loans, affordable housing, and personal loans.
• Deposit mobilisation: Low-cost CASA and term deposits fund lending book; fee arbitrage between deposit costs and loan yields.
• Fee and commission income: Account fees, remittances, third-party product distribution, and merchant services.
• Foreign exchange services (post-AD-I licence): FX conversion fees, remittance charges and trade-related FX services.
• Banking product cross-sell: Insurance, mutual funds, and other bancassurance/third-party product commissions.
• Liquidity and treasury: Interest on investments, trading gains, and ALM optimization.

• Scale deposits and CASA to reduce funding cost and support margin expansion.
• Diversify loan mix toward secured and higher-ticket retail products while managing microfinance legacy credit risk.
• Expand fee-income lines-payments, remittances and third-party sales-especially after AD-I licence.
• Leverage digital channels to lower transaction costs and improve cross-sell efficiency.
• Pursue regulatory approvals (universal licence) to broaden product set and enter corporate/wholesale segments selectively.

Ujjivan Small Finance Bank Limited (UJJIVANSFB.NS): History

• Public listing: Shares traded on NSE and BSE, enabling retail and institutional participation.
• Principal promoter: Ujjivan Financial Services Limited (largest shareholder historically).
• Corporate simplification: In 2022, Ujjivan Financial Services approved a reverse merger into Ujjivan Small Finance Bank to consolidate ownership and simplify the group structure.
• Institutional ownership: A diversified shareholder base including domestic and international institutional investors alongside promoter holdings.

• Core activities: Accepting CASA and term deposits; providing retail, micro, small-business and affordable housing loans.
• Net interest income (NII): Earned from interest spread between loans and deposits - primary profit engine for the bank.
• Fee and other income: Account fees, transactional charges, distribution and bancassurance commissions, and service charges augment interest income.
• Asset-liability management: Maintains comfortable CAR (23.90%) and strong Tier‑I (22.10%) to support lending growth and absorb shocks.
• Funding mix: Combination of retail deposits, term deposits and market borrowings; public listing enables equity capital access (equity base ₹6,323.20 crores in 2025).

• Distribution: Branch network, digital channels and microfinance legacy for deep retail outreach.
• Risk management: Maintaining high capital buffers and investment‑grade ratings (AA-/A1+) to reduce borrowing costs and support growth.
• Strategic consolidation: 2022 reverse merger simplified governance and aligned capital structure between promoter and bank.

Ujjivan Small Finance Bank Limited (UJJIVANSFB.NS): Ownership Structure

• Financial inclusion: focused on serving unserved and underserved populations (microentrepreneurs, low-income households, first-time bank users).
• Customer-centricity: simplifying access via vernacular, voice and visual interfaces, and accessible ATMs.
• Responsible lending and social impact: emphasis on sustainable microcredit, housing finance for lower-income segments, and client protection practices.

• Deposit products: savings accounts, current accounts, recurring and fixed deposits designed for low-balance customers and migrant/urban poor segments.
• Loan products: microloans (group and individual), small business loans, affordable housing loans, vehicle loans, and enterprise loans aimed at income generation.
• Government schemes & insurance: offers onboarding to PMJJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana) and PMSBY (Pradhan Mantri Suraksha Bima Yojana) to improve customer financial security.
• Digital & assisted channels: 'Hello Ujjivan' - India's first voice-visual-vernacular banking app to serve low-literacy customers; multilingual ATMs with braille-enabled keypads for accessibility.
• Interoperability & innovation: participant in the Unified Lending Interface (ULI) initiative by the Reserve Bank Innovation Hub (RBIH) to streamline loan origination and credit decisioning.

• Promoter: Ujjivan Financial Services Limited (UFSL) is the principal promoter entity that brought the microfinance and retail-banking franchise into the bank and remains the key promoter shareholder.
• Public shareholders: institutional investors (mutual funds, insurance companies, foreign portfolio investors) and retail investors hold the remainder following the bank's listing.
• Governance: board comprises representatives from the promoter, independent directors with microfinance and banking experience, and investor-appointed directors to oversee compliance and expansion strategy.

Ujjivan Small Finance Bank Limited (UJJIVANSFB.NS): Mission and Values

• Mission: Deliver affordable, scalable, and responsible financial services to underserved and emerging customers to improve livelihoods and foster entrepreneurship.
• Values: Customer-first orientation, financial responsibility, transparency, innovation, and strong community and employee engagement.

• Branch and geographic reach: 766 branches across 334 districts and 26 states & union territories, enabling deep last-mile presence.
• Product mix: Diversified loan portfolio including microfinance, housing, vehicle, and MSME loans to address both consumption and income-generating needs.
• Deposit mobilization: Retail deposit focus to build a stable funding base, supported by current and savings accounts and term deposits.
• Delivery channels: Branches, business correspondents/agents, mobile and internet banking, and partnerships for payments and remittances.

• Interest income: Primary source - interest earned on the gross loan book across microfinance, housing, vehicle and MSME portfolios.
• Net interest margin (NIM): Difference between yield on advances and cost of funds driven by deposit mix and CASA level.
• Fee and other income: Charges on account services, third-party distributions, commissions, and treasury operations.
• Cost management: Operating efficiency through branch network optimization, digital adoption, and experienced field operations.

• Loan segmentation: Microfinance remains a core product complemented by secured/priority products like housing and vehicle loans and MSME lending to diversify risk and margin profile.
• Credit underwriting: Field-level assessment, digital scoring augmentations, and portfolio monitoring to maintain asset quality.
• Capital and liquidity: Supported by retail deposits and market borrowings; investment in liquidity buffers and contingency lines aligned with credit ratings (AA-/A1+).

• Deepening retail deposits to improve CASA and lower cost of funds.
• Scaling secured products (housing, vehicle) and MSME lending to diversify risk and enhance yield stability.
• Digitalization to reduce unit costs, accelerate customer onboarding, and expand non-interest income.
• Employee engagement and culture-building reflected in workplace rankings to support field operations and customer service quality.

Ujjivan Small Finance Bank Limited (UJJIVANSFB.NS): How It Works

• Core lending segments: microfinance, affordable housing, small vehicle financing, and MSME loans.
• Funding mix: retail deposits (current, savings and term), wholesale borrowings and capital markets instruments.
• Distribution: branch network, digital platforms, BC (business correspondent) partners and agency relationships.
• Risk management: credit underwriting, portfolio segmentation, provisioning policies and diversified borrower mix.

• Interest income: The primary revenue driver is interest on advances across its diversified loan book-microfinance, housing, vehicle and MSME loans-where margin is generated between lending yields and cost of funds.
• Net interest income (NII): Strong core banking operations are reflected in NII, which rose 19% year-on-year to ₹941 crore, showing expansion of interest margin and loan growth.
• Fee and commission income: Non-interest revenue is earned from account maintenance charges, transaction fees, overdraft/collection charges, third-party product distribution and other value-added banking services.
• Deposit mobilization: A stable funding base-₹38,619 crore in deposits with a CASA ratio of 25.6%-lowers overall cost of funds and supports profitable lending.
• Capital & liquidity management: Use of term borrowings, interbank markets and capital-raising to optimize leverage and support growth while maintaining regulatory ratios.

• Total income increased to ₹7,201 crore in FY2024-25 from ₹6,464 crore in the prior year, indicating growth across interest and fee streams.
• Deposit composition and CASA share (25.6%) contribute to cost-effective funding and improved net interest margins.
• Credit profile: Ratings of CARE AA- (Stable) and CRISIL A1+ reflect sustained performance and liquidity/credit strength across long-term bank facilities, fixed deposits and CD programs.

• Scale of micro and retail lending: High-volume, small-ticket loans provide steady interest income while diversifying borrower-level risk.
• Cross-sell and fee generation: Transaction services, remittances, and ancillary products increase non-interest income per customer.
• Cost controls and digital adoption: Branch rationalization, digital onboarding and process automation reduce operating costs and improve efficiency ratios.
• Asset quality management: Active monitoring, targeted provisioning and selective origination to protect spreads and capital.

Ujjivan Small Finance Bank Limited (UJJIVANSFB.NS): How It Makes Money

• Customer reach: ~97 lakh customers across 754 branches and 613 ATMs in 326 districts and 26 states/UTs (as of June 30, 2025).
• Credit profile: Rated AA- (Stable) / A1+ by CARE / CRISIL for long-term facilities, fixed deposits and CD programme.
• Culture: Ranked 26th among India's Best Companies to Work for 2025 by Great Place to Work® Institute.

• Net interest income: Core spread between interest earned on the loan book (MSME, microfinance, retail, secured loans) and interest paid on deposits and borrowings-primary revenue source given a ₹33,287 crore loan book and ₹38,619 crore deposits.
• Fee and commission income: Account fees, remittance charges, third-party distribution (insurance, mutual funds), merchant acquiring and card fees across a 97 lakh customer base.
• Trading and treasury income: Investment portfolio yields, trading gains and cash management from surplus liquidity; treasury helps optimize interest rate risk for a liability-driven model.
• Ancillary income: ATM interchange, POS charges and bancassurance commissions.

• Liability franchise expansion: Building low-cost CASA and term deposits to reduce funding cost (targeting deposits of ₹1.2 trillion by FY30).
• Loan mix transformation: Shift toward secured, diversified credit (MSME, retail mortgages and secured commercial loans) to improve risk-adjusted yields while lowering credit costs.
• Distribution scale: Cross-sell to 97 lakh customers via branches, digital channels and partnerships to raise non-interest income share.
• Capital and ratings support: AA- / A1+ ratings enable competitive wholesale funding and retail confidence, supporting growth and cost management.

• Scale: Gross loan book ₹33,287 crore vs. deposit base ₹38,619 crore indicates current deposit-led balance sheet with room to scale loans to the FY30 target of ₹1.0 trillion.
• Profitability levers: Improving CASA mix, expanding secured lending, and increasing fee income are central to margin expansion.
• Risks: Asset quality pressures from unsecured micro-loans, competition for deposits, and regulatory approvals for expanded permissions (universal banking) are material.
• Outlook: Management's FY30 roadmap targets triple deposits and a decade-scale transformation into a diversified, secured-focused, liability-driven bank-execution and macro conditions will determine pace.