Ujjivan Financial Services, a Bangalore-based microfinance company, would be interested in applying for a specialised banking licence if it is offered by the Reserve Bank of India (RBI), its chief executive and managing director Samit Ghosh said.
The micro-lender has not applied for a new banking licence even though two of its rivals – Bandhan Financial Services and Janalakshmi Financial Services – have sought RBI's permission to open new banks.
“We believe a regular commercial banking licence would not suit us as our clients’ profiles are different from that of banks. We would be more interested in getting a specialised banking licence with financial inclusion as the primary agenda,” Ghosh told Business Standard.
Ujjivan Financial Services, however, would not be keen to set up a local area bank.
“One of the main risks for local area banks is their geographical concentration. We survived the crisis in the microfinance sector since we are geographically diversified and have presence across 20 states. Also, it is very difficult to raise capital for local area banks. So, we are not interested in this business,” Ghosh said.
The micro-lender is currently diversifying its product portfolio to sustain growth in its business. The company has recently introduced a home loan product in partnership with IFC, launched a micro pension programme and plans to offer higher education loan.
Ujjivan Financial Services has also started offering individual business loans for meeting the working capital needs of small traders and businessmen. It is also giving advances for animal husbandry. The new loan products would be initially offered to the company's existing customers. The micro-lender closed last financial year with a customer base of 1.1 million.
“I believe the future of microfinance would not be group lending alone. We need to transform ourselves into a multi-product financial services firm to maintain business growth. We have been planning to introduce these products for some time now. But because of the crisis in the microfinance sector (which began in October, 2010) we had to delay our plan. We have started offering the new loan products from this financial year,” Ghosh said.
The company is also increasing its headcount in order to market these products. It aims to hire 600 loan officers over the next to financial year. Currently, it has 2,358 loan officers of which 160 are dedicated for individual lending. “The ticket size of these (individual) loans are large, sometimes it goes up to Rs 1,50,000. Hence, we need to retrain our existing employees and hire new people for better risk management,” Ghosh said.
The micro-lender has not applied for a new banking licence even though two of its rivals – Bandhan Financial Services and Janalakshmi Financial Services – have sought RBI's permission to open new banks.
“We believe a regular commercial banking licence would not suit us as our clients’ profiles are different from that of banks. We would be more interested in getting a specialised banking licence with financial inclusion as the primary agenda,” Ghosh told Business Standard.
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RBI, in a recent discussion paper on the banking structure in India, has debated the need for having specialised banks through a differentiated licensing regime.
Ujjivan Financial Services, however, would not be keen to set up a local area bank.
“One of the main risks for local area banks is their geographical concentration. We survived the crisis in the microfinance sector since we are geographically diversified and have presence across 20 states. Also, it is very difficult to raise capital for local area banks. So, we are not interested in this business,” Ghosh said.
The micro-lender is currently diversifying its product portfolio to sustain growth in its business. The company has recently introduced a home loan product in partnership with IFC, launched a micro pension programme and plans to offer higher education loan.
Ujjivan Financial Services has also started offering individual business loans for meeting the working capital needs of small traders and businessmen. It is also giving advances for animal husbandry. The new loan products would be initially offered to the company's existing customers. The micro-lender closed last financial year with a customer base of 1.1 million.
“I believe the future of microfinance would not be group lending alone. We need to transform ourselves into a multi-product financial services firm to maintain business growth. We have been planning to introduce these products for some time now. But because of the crisis in the microfinance sector (which began in October, 2010) we had to delay our plan. We have started offering the new loan products from this financial year,” Ghosh said.
The company is also increasing its headcount in order to market these products. It aims to hire 600 loan officers over the next to financial year. Currently, it has 2,358 loan officers of which 160 are dedicated for individual lending. “The ticket size of these (individual) loans are large, sometimes it goes up to Rs 1,50,000. Hence, we need to retrain our existing employees and hire new people for better risk management,” Ghosh said.