Ujjivan Financial Services Ltd Management Discussions.

Please read this Management Discussion and Analysis in conjunction with Management Discussion and Analysis of Ujjivan Small Finance Bank Limited (wholly owned subsidiary of the Company and hereinafter in this section referred to as the Bank) provided on page number 248 of this annual report.

FY19 has been a remarkable year in terms of performance. Notwithstanding inherent challenges of the industry and existing competition among peer companies, Ujjivan has emerged triumphant in posting robust numbers year-on-year. Catering to the unserved and the underserved sections of the community we have been able to abide by the values that enable our growth towards becoming a mass market bank. We are confident that as we progress we shall continue to perform profitably to the best of our capacities.

Key highlights pertaining to our consolidated financials are showcased below:

Consolidated Financials (as per Ind-AS)
Particulars (? In Crores) FY19 FY18 y-o-y
Total Income 2,013.6 1,544,7 30.3%
Credit Cost 40.6 310.8 -86.9%
Finance Cost 727.0 601.6 20.9%
Operating Expense 1,683.1 1,222.3 37.7%
PAT 150.4 25.9 479.7%
Operating Expense Ratio* 11.2% 9.8% 1.4%
Cost to Income Ratio* 76.5% 67.1% 9.4%
NII 1,189.8 898.6 32.4%
Net Interest Margin (%)* 11.1% 10.6% 0.5%
Total Assets 14,025.9 9,522.2 47.3%
Total Debt 4,433.0 3,202.8 29.1%
Net worth 1,877.7 1,731.9 8.4%

*Ratios are as per previous Indian GAAP

Key highlights of the Banks business and functions

Business growth

Disbursements have been growing at a robust pace, achieving a healthy growth rate of 37.7% year-on-year which now stands at 11,089 Crores. This has also led to loan book growth which is now pegged at 11,049 Crores up by 46.2% over March 2018. Such augmentation is largely on account of increased customer base and branch expansion.

Segment-wise performance

Our MicroBanking disbursements were commendable this improvement year at 9,749 Crores, witnessing a growth of 28% over March 2018. Introduction of new products and better credit enhancement process has helped this vertical to achieve sustainable growth. Our Micro and Small Enterprises (MSE) business has also witnessed meaningful growth, disbursing 496 Crores for FY19 as opposed to 203.2 Crores for FY18. Operating within the Affordable Housing space, our Housing vertical has seen a steep growth of over 150% from previous year ended March 2018, taking disbursements for FY19 to nearly 590.3 Crores. Increased focus on secured lending, higher loan ticket sizes and expansion of the geographical footprint has been key growth drivers for the business.

Deposits and Reduction in cost of funds

As of March 2019, we have managed to double our deposit base which is now at 7,379 Crores up from 3,772 Crores.

This advancement is owing to growth in retail as well as institutional book. Our retail deposit was at 2,736 Crores up from the previous figure of 428 Crores. The reliance on Certificate of Deposits (COD) was also kept minimal this year. Our continuous efforts to reduce cost of funds is showing results which is now at 8.5% as compared to 9.0% during the previous year. Our Branch banking team has launched ‘Sampoorna Family Banking programme. This programme will be a key enabler of retail deposit growth in FY20.

Credit Quality

Our credit portfolio is showing significant due to continued efforts towards cultivating asset quality.

We have managed to bring our Gross Non-Performing Asset (GNPA) figures significantly down to 0.9% from 3.6% in March 2018. The improved portfolio performance is due to sound credit policy framework and technology driven robust loan sanctioning.


Technology has always wielded crucial influence over the operations associated with Ujjivan. Employment of superlative expertise along with stable Information Technology (IT) practices will continue to leverage performance enabling cost effectiveness and higher productivity. We have world class IT systems in place which will continue to meet customers needs and expectations.

Risk and Compliance

On the strong foundation of risk and compliance policies and framework, enhancement with core competencies were built in newer areas like cyber security, cyber governance, transaction monitoring, anti-money laundering and regulatory reporting. Key initiatives included comprehensive checklist for branch banking process, connect programmes, score cards for monitoring operational risks at granular level, migration to Enterprise Governance Risks and Compliances (EGRC) module in Statistical Analysis System (SAS), comprehensive review of all operational and financial controls under International Finance Corporation (IFC), and mid office treasury function with proactive approach to Asset Liability Mismatch (ALM). The Compliance team rigorously monitors adherence to each of the licensing conditions and the operating guidelines for Small Finance Banks (SFB) with certification and implemented a framework for Risk based supervision.

Network expansion

The Bank rolled out 287 banking outlets including 73 in Unbanked Rural Centres (URCs). The Bank branches are equipped with a blend of technology and people to offer our customers best-in-class banking experience. We offer both asset and liability products under one umbrella from our branch, given the banking needs of the unserved and underserved customer base that we focus on. Our asset verticals including microfinance, Housing, MSE and so on coupled with the liabilities come together, developing a synergetic effect in relation with tremendous cross sell opportunities as well as strong team connect. We believe growth asthis will have a significant well as networking in the impending years with a larger potential customer base.


Apart from ‘brick and mortar structures, the Bank is investing heavily in creating multiple channels which are being promoted as touchpoints among our customers. The Bank has created a robust platform of internet banking, mobile banking, phone banking, SMS, missed call banking, ATMs etc. and is encouraging customers to take advantage of alternate channels.


The Bank ranked 16th on the ‘Best Place to Work for in Asia polls. The Bank was also rewarded for its Field Process Automation (Glow), IT security and legal function. The Bank has also been awarded The Best IT Risk Management and Cyber Security Initiatives award for the second consecutive year among other competing SFBs for its continued commitment to cyber security and resilience.

‘Best HR Practice in Finance Sector at BFSI Awards- 2019 was also conferred to the Bank.

Risk management framework of the Company

The Company being principally concerned with core investment, has ventures primarily in its wholly owned subsidiary, which being an SFB, has a risk management committee in place which consists of well experienced directors from diverse backgrounds who bring in the best risk practices to the organization. The Committee of the bank reviews its risk management framework and verifies adherence to various risk parameters and compliances.

As a core investment Company with a key venture in the bank which is our 100% subsidiary, the Companys Board has an oversight function of the Bank. We have signed a Memorandum of Understanding with UFSL which includes sharingofinformationrelatedtobusinessandperformance of the Bank, to facilitate effective oversight and compliance with statutory and regulatory requirements.

Thus, a set of information including monthly and quarterly business and regulatory reports and returns, Board and committee meeting related minutes and other information is systematically shared by the Bank and reviewed by the Companys Board.

By virtue of the MoU, the Company is also required to provide capital support by means of raising external equity or Tier-I/Tier-II bonds depending on business growth and requirements of the Bank. The Company can extend financial support to the Bank by way of loan or arrangement such as letters of support/non-divestiture for smooth functioning of the latter at market related terms, which are subject to statutory and regulatory guidelines as applicable.


Being a Non-Banking Finance Company (NBFC)-Corporate Information Companaies (CIC), it does not have any operations apart from investment in the Bank and a treasury of around 120.7 Crores. As part of the treasury investments, we finance our surplus investments like Fixed Deposits (FDs) and mutual funds as provided in our investment policy and monitor them on a regular basis. Our standalone cash expenses are borne out of our income from these investments.

Corporate Social Responsibility (CSR) activities

During the year, Ujjivan has undertaken its CSR responsibilities through external Non-Governmental Organisations (NGO) with a focus on community development programmes, medical campaigns, clean water drinking initiatives, alongside extending support through contribution to Kerala Chief Minister Disaster Relief Fund, delivering food and medical aid to flood disaster support and offering provisions to schools affected by the flood and medical aid to Cyclone Gaja relief funds in Tamil Nadu, enabling certain NGOs to carry their efforts towards social welfare forward.

The Company has been spending on the CSR programmes even before it was made mandatory under the Companies Act, 2013. Since the manpower and network to carry all the CSR initiatives on our own was not present within the Company then, we primarily engaged external NGOs like Parinaam Foundation and Piramal Foundation to execute the same for and on behalf of the Company.

Parinaam in collaboration with Ujjivan has undertaken the execution of a Community Development Programme (CDP) under the brand ‘Chote Kadam that brings together stakeholders, the community and the society at large to build a better life for the unserved and underserved. We endeavour also to provide basic infrastructural facilities to the unserved and the underserved communities across the country. During the year, Parinaam has implemented 70 projects in the areas of public infrastructure, health and education under Chote Kadam Programme for and on behalf of the Company.