UJJIVAN FINANCIAL SERVICES LIMITED: MFI’s second entry

Ujjivan started operations as an NBFC (A Non-Banking Financial Company) in 2005 providing a full range of financial services to the unorganised micro finance sector. The business is primarily based on the ‘joint liability group lending model’, for providing collateral free, small ticket-size loans to economically active women. It also offers individual loans to Micro & Small Enterprises (“MSEs”). On October 7, 2015, out of 72 applicants, the company received an in-principle approval from the RBI to set up a Small Finance Bank (“SFB”).

As of March 31, 2015, it operates in 24 states and union territories; as also 209 districts across India;  and Net AUM stands at ₹40,797.62 million. All assets under management (“AUM”) fall under the priority sector lending norms prescribed by the RBI. Further, as of September 30, 2015, it has approximately 11.15% of market share of the NBFC-MFI (Non-Banking Financial Company-Micro Finance Institutions, defined as a non-deposit taking NBFC) business. In addition to loan products, it also provides non-credit offerings, comprising of life insurance products, in partnership with insurance providers such as Bajaj Allianz Life Insurance Company Limited, Kotak Mahindra Life Insurance Company Limited and HDFC Life Insurance Company Limited.

Products offered: 

1) Group Loan products:  These products are built on the ‘peer-guarantee loan model’ (joint liability group), which enables individuals to take loans without having to provide a collateral or security. It constitutes the largest share of the pie related to the loan portfolio.

2) Individual loans – Constituted 11% of the loan portfolio in FY15. This offering is seeing highest growth and fits well with the SFB structure that will eventually evolve. Company has introduced an independent credit methodology into the IL process. Individual Loan proposals undergo field based credit underwriting and verification before being presented to the sanctioning committees.

3) Housing finance - Company has launched the ‘Unsecured Home improvement loan’ (upto Rs. 150,000) under the Individual Lending Programme. Company has also launched the product portfolio of Secured Home Loans with ticket size of upto 10 years and competitive interest rates ranging from 15.75% to 19.75%.

4) Insurance - Through partnership with Bajaj Allianz Life Insurance Company, it offers Life Insurance to customers and their spouses.

Financials:

The company reported net profit of Rs 757.88 million in FY15 and total revenue of Rs 4622.72 million   for six months ended Sep 30, 2015. The NPA’s for six month ended Sep 30, 2015 were 0.13%.