Ujjivan Small Finance Bank's Universal Banking Licence Bid Rejected by Reserve Bank of India

Ujjivan Small Finance Bank Fails to Secure Universal Bank Status

Ujjivan Small Finance Bank Ltd announced on Monday that the Reserve Bank of India (RBI) has rejected its recent application for universal bank status, citing the need for greater diversification of its loan book. The bank's application for the transition was first made in February last year.

According to the lender's stock exchange disclosure, the RBI took note of Ujjivan SFB's recent efforts towards diversifying its loan portfolio but deemed that there is still scope for progress in this area. As a result, the regulator has advised the bank to reapply after demonstrating a more diversified portfolio.

This setback may hinder Ujjivan SFB's ability to offer a wider range of services and expand beyond its original mandate of serving underserved segments. However, the bank has stated that it will continue to embark on the path of diversification and resubmit the application in due course, keeping the RBI's guidance in view.

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The RBI's criteria for transition include a five-year track record of satisfactory performance, a net worth of 10 billion rupees ($107 million), diversified lending, meeting capital requirements, recent profitability, and limited non-performing assets. Ujjivan SFB's loan book as of December 2025 stood at 370.5 billion rupees, with deposits worth 422.2 billion rupees.

In contrast, AU Small Finance Bank received the RBI's 'in-principle' approval to transition into a universal bank in August, becoming the first full-fledged banking licence issued in nearly a decade.