RBI rejects USFB universal license bid over unsecured loans
Ujjivan Small Finance Bank (USFB) just got its bid to become a universal bank turned down by the Reserve Bank of India (RBI).
The main issue? Over half of USFB's ₹40,655 crore loans are unsecured.
About 36% of the portfolio is loans to joint liability group members, and housing loans account for about 26%.
Basically, RBI wants to see a more balanced mix before giving the green light.
RBI directs USFB to diversify portfolio
RBI has told USFB to work on diversifying its loan portfolio before trying again.
While USFB also offers MSME, vehicle, agriculture, and gold loans, it's not quite enough yet.
Only AU Small Finance Bank has received an in-principle universal bank license; others like Jana faced similar rejections.
USFB says it's taking RBI's feedback seriously and will keep working toward that universal bank license.