By Piyush Shukla
Ujjivan Small Finance Bank is likely to witness an improvement in the asset quality in the second half of the current fiscal on the back of overall healthy collections and higher focus on reducing flow of stressed loans towards NPA category, Carol Furtado, chief operating officer, Ujjivan Small Finance Bank, tells Piyush Shukla. Excerpts:
Your disbursements in July-September rose sharply, but overall gross advances grew 5% to Rs 14,514 crore. What is your credit growth outlook?
The economy has opened, and all our business verticals are doing well. We had given a growth guidance of 15-20% or so sometime in August; we are keeping up to it. Since the economy has opened, we are aiming to get all our business lines to contribute well, and September and October have been good months for us. We hope to see even double the growth in November. [We are doing quite well in our] 100 days’ plan, where rebuilding our business momentum was one of our key focus areas … and disbursements in the second quarter (Q2FY22) have improved to Rs 3,000-plus crore, which is around 114% growth year-on-year and around 138% quarter-on-quarter. So improvement is across all business verticals.
Are there any new loan products in the pipeline?
Yes, this year … we will also be launching products like the ECLGS (Emergency Credit Line Guarantee Scheme), CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises), the MSE (micro and small enterprises) segment and GST-based working capital finance and some products in the healthcare segment. On the personal loan side, we will be expanding it to balance transfer, pre-approved loans and pre-approved digital products. So those will be the kind of new products that we will be launching. But our focus is on core, and some of the other products that we are incubating we will continue to do so and maybe in the next financial year we will take it up for review.
Your retail deposits account for 52% of the overall book. Where do you think its share will be at the end of the current financial year?
We will go more granular in our retail liabilities strategy and that should serve two purposes: stickiness and low cost. We are more focused on delivering value to the customers in the form of customer service and products that will be the need for each segment, and we want to gain customer loyalty in this segment so that is where our focus is. Also, the aspiring middle class [is] an area we will be focusing on, and we have various segments like senior citizens, small traders, and manufacturers, so we will be introducing value-added products for these segments.
As you move gradually towards non-micro finance loans, till when will you be able to maintain net interest margin (NIM) at 8.1%?
NIMs are currently subdued as GNPA are high. Actual yields in businesses are intact. Over the next few years, with change in business mix, there will be some reduction in overall yield. However, current NIMs are not comparable due to derecognition of interest income on GNPA pool of 11.8%.
You spoke about higher bad loans. Do you think that GNPAs have peaked at 11.8% and what is your view on asset quality in FY22?
Collections have picked up well. We are focused on reducing PAR (portfolio at risk) flow to higher buckets, collections from restructured and NPA pool, further increasing overall collections. With this context, we believe things in H2 (Oct-March) would be better on the credit quality front.