Ujjivan SFB's Universal Banking Setback: RBI's Diversification Demand

Ujjivan Small Finance Bank's application to transition to a universal bank was rejected by the Reserve Bank of India due to insufficient loan portfolio diversification. The central bank advised Ujjivan to reapply after demonstrating improved diversification. The bank's efforts have been acknowledged, but further progress is needed.

Ujjivan Small Finance Bank's attempt to shift to a universal banking model hit a roadblock as the Reserve Bank of India (RBI) rejected its application. The apex bank stipulated that Ujjivan must exhibit a more diverse loan portfolio before reapplying for the licence.

According to Ujjivan's regulatory filing, the RBI acknowledged the bank's recent strides toward portfolio diversification but stressed the need for further advancement. 'There is room for improvement,' the RBI noted, advising the bank to make substantial progress before resubmitting their application.

In February 2025, Ujjivan made its aspiration for a universal banking licence public by applying to the RBI. Despite the setback, Ujjivan's shares remained relatively stable, closing at Rs 60.34 on the BSE.