Financial Inclusion Through Financial Literacy Is A Key Objective: Samit Ghosh, MD and CEO, Ujjivan Small Finance Bank

Tell us a bit about your vision and mission for Ujjivan. What led to its founding?

In India banks serve the affluent and the top half of the middle class. This accounts for around 25-30 % of our population. The rest are either underserved or not served at all. I was involved with the Indian retail banking revolution started by Citibank in 1985 and subsequently with Standard Chartered Bank and HDFC Bank. This significantly changed the lives of the middle class in the course of last 30 years. However, the mass market still remains inadequately served. This presents a major opportunity. Our mission is to provide a full range of financial services to the mass market leveraging the latest technology and over the course of next seven years serve at least 40 million customers. 

What are your focus products? Tell us a bit about your newly introduced propositions, such as personal loans, 2-wheeler loans and the “Kisan Suvidha loan”
We started only with the microfinance loan products. We added affordable housing and micro-small business loan products three years ago. Two years ago after establishing the Small Finance Bank we are able to offer a full range of deposit products. 

We are required to have 25% of our branches in the unbanked rural centres and we are developing products for the customers in these areas like the Kisan Suvidha Loan. It is composite loan for dairy, post-harvest transportation, farm implement purchase, fishery, sericulture, horticulture, sheep rearing etc. 

We are providing personal loan segment which traditional banks have not targeted like teachers, nurses, blue and white-collar workers etc.

Initially, we have started with two-wheeler loans for the spouses of our 4 million women micro-banking customers.

In all these products we are delivering our services using the latest digital technology making the customer experience a memorable one.  

How do you control default risk within your portfolio? Do you find that to be an issue within the market segment that you’re operating in?
Since inception, we have managed the credit risk using the latest disciplines and technology of retail banking. This has always been an independent function. We use the latest developments like score cards, analytics, loan management and collection systems to manage this risk. In micro-banking our close one on one relationship with customers has been key to manage this risk.

Tell us about how Ujjivan is playing its part towards financial inclusion on the ground level, through launch of URC branches.
We initially looked to serve these unbanked rural areas through brick and mortar branches and also through the Banking Correspondent network. We found that in order to fully serve these customers we did need a branch set up. We expect have 120 URC branches by this financial year end. We provide basic banking services which includes deposit taking, funds transfer, especially Direct Benefit Transfers etc. to the whole population; microfinance to the women & men of the area and the specialized rural lending products like the Kisan Suvidha Loans. 

For us, financial inclusion through financial literacy is a key objective to enable our customers and conduct financial transactions. Parinaam Foundation, our sister concern conducts financial literacy programs jointly with our employees through 79 Prerakas (trainers) and has trained covers over 8,30,000 Ujjivan customers and 1,40,000 of their children.

Below are the details of our financial literacy programs:

Tell us about your various CSR initiatives that you’ve undertaken since the bank’s inception

Ujjivan has always adopted a unique Corporate Social Responsibility (CSR) approach wherein our staff and community members come together to choose a project that will develop the area they reside in by focusing on their local needs. We started the Community Development Program – Chotte Kadam way back in 2006. This was the same year when Ujjivan turned profitable and we wanted to give something meaningful back to community based on their needs. Hence we initiated and executed projects which were purely based on the requirement and decided by the community. We focus in the broad categories of public infrastructure facilities (bus stops, drinking water facility, street lighting), education – upgrading schools, health care – improving health centres and environment, addressing critical community needs in the areas of education, healthcare, sanitation and public infrastructure across India. Through this initiative our aim is to serve unmet community needs of the unserved and underserved beyond financial services.

At Ujjivan we are extremely committed to serving the unserved and underserved. This belief is an integral part of our business philosophy. So far, Community Development Programme of Ujjivan has reached out to more than 12 lakh beneficiaries through 1934 community based interventions across India.

What’s your experience with tech-adoption within the segment that you’re operating in? You offer internet banking, phone banking and mobile banking facilities to your customers. What percentage of your customer base actively uses these facilities?
We believe that we can serve this segment of customers viably only with effective use of technology. They need to be taken through the journey from person to person interaction to assisted technology like handheld devices, phone banking to self- service – mobile banking. The technology adoption is high and we are working on making these devices user friendly to semi- & illiterate customers

Lastly, tell us a bit about your business goals for 2019.
Our goal is to increase our customer base by 10X over next seven years. In 2019-20 we expect our loan business to grow 30-35 % but expect much sharper rate of growth of deposit business.