Positioning ourselves as a bank for mass market: Nitin Chugh, President, Ujjivan SFB | Interview

Ujjivan Small Finance Bank president Nitin Chugh

Ujjivan Small Finance Bank (SFB) is keen on positioning itself as a bank for the mass market and increasing its presence across the country, says president Nitin Chugh. The bank plans to raise up to Rs 750 crore through an IPO. Chugh told Hariprasad Radhakrishnan that the management has been trying to minimise the impact on existing shareholders of the bank’s holding company, Ujjivan Financial Services. Edited excerpts:

Would shares of Ujjivan Financial Services trade at a discount because of the bank’s IPO?

They are already trading at a discount, but that is okay, I think. When the holding company lists the subsidiary, the holding company discount obviously plays out. We are trying to minimise that by trying to see that shareholders of the holding company subscribe as much to shares of the bank in the IPO. That is why we have also kept the 10% reservation for retail shareholders of the holding company.

What would be the focus of the bank going forward?

We want to focus on the mass market. Microfinance, obviously, is our original line of business. But above microfinance is the mass market and above that is the mass affluent. And then comes the wealthy segment. We do not want to be in the wealthy and the mass affluent segments. We are clearly targeting ourselves to be a bank for the mass market. Everything else is worked around this, including the bank’s product and distribution channel strategy.

Do you see yourself expanding in a big way outside Karnataka, Tamil Nadu and West Bengal where which the bank has significant presence?

We would like to go to new places where we don’t have branches. Let’s say, we were in western Uttar Pradesh, we are now getting into eastern UP. We would like to expand to more districts in the same state. Or maybe, more branches in the same district. And maybe in some cases, altogether new states as well.

How would the bank benefit from the proposed reverse merger with its holding company?

There is a possibility of reverse merger as there is a provision in the SFB guidelines. It would be in our interest to seek the approval of the Reserve Bank of India on the reverse merger. As the bank is the only business under the hold-co, it makes a lot of sense to have one operating company and one listed entity.