Ujjivan Small Finance Bank shares fall 5.5% as RBI returns licence application
RBI flags need for loan diversification, high microfinance exposure concerns
Profit rises 71% YoY, deposits grow 22% despite regulatory setback
Shares of Ujjivan Small Finance Bank declined sharply on Wednesday, falling 5.5% in early trade after the Reserve Bank of India returned the lender’s application for a universal banking licence.
The stock was trading at ₹56.96 during market opening hours, reacting to regulatory feedback that highlighted the need for further diversification in the bank's loan portfolio. The bank has a market capitalisation of over ₹11,000 crore, with a 52-week high of ₹68 and a low of ₹38.91.
1 April 2026
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In a stock exchange filing, the bank said the RBI acknowledged its recent efforts towards diversifying its loan book but indicated that more progress is required before granting approval. The regulator has advised the bank to reapply after demonstrating a more balanced portfolio.
This marks the second instance of a small finance bank's application being returned by the RBI in recent months. Earlier, Jana Small Finance Bank faced a similar outcome, while AU Small Finance Bank received in-principle approval to transition into a universal bank.
Focus on Diversification, Asset Quality
The RBI has been encouraging small finance banks to reduce dependence on unsecured microfinance loans and diversify into segments such as retail, vehicle and SME lending. This is aimed at improving asset quality, reducing risk concentration and strengthening long-term earnings stability.
For Ujjivan SFB, group loans currently account for about 45% of its ₹37,057 crore gross loan book as of Q3FY26, reflecting a significant exposure to microfinance. The regulator's stance underscores the need for a more balanced loan mix before granting a universal banking licence.
Despite the regulatory setback, the bank has reported strong financial performance. It posted a 71% year-on-year rise in net profit to ₹186 crore in Q3FY26, compared to ₹109 crore a year ago.
Net interest income (NII) reached an all-time high of ₹1,000 crore during the quarter, up 12.8% YoY. Deposits grew 22.4% to ₹42,223 crore, while the credit-deposit ratio stood at 88%.
The gross loan book expanded 21.6% YoY, supported by record quarterly disbursements of ₹8,293 crore, indicating strong business momentum despite ongoing portfolio recalibration.
