Sachin Bansal, Flipkart ex-CEO and BAC Acquisitions co-founder, has joined Ujjivan Small Finance Bank’s board as an independent director.
This move becomes significant when we look at what Bansal has been trying at for the past 9-10 months. His plan was to open a bank, but for that he had to obtain a license from RBI. After discussions with the apex bank at length, he realised that he needed to meet a certain criteria for obtaining that license.
Most important one of these being that the promoter of the new bank should already have an NBFC, which they can then convert or transfer into the new bank.
So is it a mere coincidence that Sachin Bansal joined the board of an entity that is currently focussed on chasing the process of becoming a bank? We think not.
But, how does it make sense for Ujjivan? As ET reports, the Small Finance Bank is aiming to scale up its business with the help of technology and turn the business into a mass market bank. Here, Sachin Bansal can offer the bank with his extensive knowledge of tech and business as well as brand value before entry into the larger market, in return for making him a direct part of the process as a director.
Ujjivan had recently also appointed Nitin Chugh, the ex- digital banking head of HDFC Bank., as their next Chief Executive to lead the process of digitising the new bank to drive scale.
August will see Chugh joining the Bank, but he will take Samit Ghosh’s Managing Director position in December. Meanwhile, Bansal will join the board as soon as June 1.
Why Ujjivan Small Finance Bank?
It is not just that Ujjivan is a Small Finance Bank scaling to a mass market bank that becomes the selling point for the firm. In past one fiscal year, the firm has seen major improvement in terms of its numbers. Net annual profit has gone up 27X from Rs 7.3 crore to Rs 198.4 crore, net Non Performing Assets (NPA) ratio went down from 0.7% to 0.3%.
The share of retail deposits grew from 11% of the total (Rs 428 crore) to 37% of the total (Rs 2,736 crore) and the loan assets increased 46% to Rs 11,049 crore.
One area of concern remained the high cost to income ratio that the firm plans on tackling by starting the facility of current account and savings account (CASA). For investor interest the Bank will try to obtain assurance from RBI along with the license by listing the bank within the deadline. A win win deal for all parties.