Small bank licensee, Ujjivan Financial Services Ltd, plans to open 100 bank branches in order to meet the regulatory norms of a small bank license. Ujjivan’s Rs 885-crore IPO was fully subscribed by 122% on May 2, the last day of its public issue.
Although the RBI regulations require Ujjivan to have at least 25% of its bank branches in unbanked areas, it plans to open all those 100 branches in unbanked areas. It has already started the identification process of these new branches and expects to launch its banking business by April 2017.
The RBI regulations also require the small bank licensee to bring down the foreign holding to 49% or lower. A pre-IPO placement has already brought down the foreign shareholding to 77% and the IPO will further reduce it to 45%.
Ujjivan has about 470 branches spread across 24 states, holding about 11% market share in the nationwide NBFC-MFI business. The MFI aims to convert around 40% of its existing branches into bank branches in the initial phase, with the aim to eventually move the entire business to the proposed bank.