Ujjivan Small Finance Bank is likely to apply to the Reserve Bank of India for reverse merger with Ujjivan Financial Services by November this year.

“The RBI has clarified to the Association of Small Finance Banks that we can apply three months prior to completing five years of business,” said Nitin Chugh, Managing Director and CEO, Ujjivan SFB, adding that this would mean the bank can apply by early November.

It is hopeful that the process may be completed within a 12 month period.

“Instead of applying in February of next year, we will get to apply in November this year. So, we will easily be able to save three months,” Chugh further said.

In a stock exchange filing in July, Ujjivan SFB had said it would be initiating necessary steps for the amalgamation of Ujjivan Financial Services with the bank in accordance with applicable laws and guidelines.

Meanwhile, with a recovery in credit demand and improvement in collection efficiencies, Chugh said the bank is cautiously optimistic.

“We are seeing a strong demand in housing, affordable housing dedicated to micro small enterprises. in microfinance, personal loans,” he said.

The bank is retaining its credit growth target of 20 per cent to 25 per cent this fiscal but Chugh said it may be closer to 20 per cent, given the impact of the second wave of the pandemic.

The lender is also witnessing repayment by customers from July onwards and expects NPA recoveries to improve.

“Collection efficiencies improved to 93 per cent in July compared to 78 per cent in June,” he said, adding that the second quarter of the fiscal is looking quite optimistic on business as well as collection.

The bank had reported a standalone net loss of Rs 233.48 crore in the quarter ended June 30, 2021 with gross non performing assets rising to 9.79 per cent of gross advances.

The lender is also planning to scale up its gold loan business this fiscal and expand it to 25 branches this quarter. In the current fiscal, it plans to take the gold loan offering to 100 branches.

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