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Ujjivan succession planning: By Dec, expect to apply to RBI with three names, says Samit Ghosh

Samit Ghosh, MD & CEO, Ujjivan Small Finance Bank ,confirms ..

Samit Ghosh, MD & CEO, Ujjivan Small Finance Bank ,confirms to ET Now that the process of succession planning has started and that a total of 6 candidates have been shortlisted.

Edited excerpts:
Media reports indicate that the succession plan for Ujjivan has already started as you are to retire sometime in November 2019, a year from now. Could you confirm the news?

Yes. Our board has already started the process of succession planning and we are well on the way. We have short listed a number of candidates. We have excellent candidates — both internal and external — and by December, hope to be able to apply to RBI with three names, which is the requirement.

Typically when succession planning is happening, it is a toss-up between an internal candidate and an external one. Who would you prefer to take over from you?

We have both internal and external candidates and there are three criterias to look at. One is whoever is coming to lead Ujjivan must be aligned to the purpose of Ujjivan because it is a small finance bank with a specific objective which the Reserve Bank has set in terms of financial inclusion.

Second is the fact that we have an excellent team which we have built over the last 10 years and whoever comes, should be able to hold the team together.

The third criteria is that Ujjivan after converting into a small finance bank and making all the investments in terms of technology, infrastructure and products, is ideally poised for a phenomenal growth to build a mass market bank over the next five-seven years. Whoever comes should have that experience and ability to take Ujjivan to that next level. We have a four million customer base today, maybe in next seven years, we will be looking to grow that 10x and become a real big mass market bank in India. The person who comes in should have the kind of experience and energy to take Ujjivan forward. It is a mix between internal and external but that is what we are looking for.

How many candidates have been short-listed already? Has the list already gone to the RBI?

We have close to half a dozen candidates including both internal and external ones. The final rounds of interviews are going on and we will finalise three of them from that. This is the RBIs requirement and we will apply to RBI by December because we have time till November and we are looking for maybe a six-month overlap which is more than enough.

What are key focus areas at the bank where you see growth visibility emerge in the next one to two years?

For growth, digital technology and experience is extremely important and we feel that the large part of the growth probably will come from the semi-urban and rural areas and that is also the focus which RBI has in terms of the fact that 25% of our branch network has to be in rural areas. People with a very strong technology background and experience is very important to take the bank forward in the next seven years.

In the recent NBFC turmoil and tight liquidity conditions, have you faced any pressure on the liquidity front?

We have not faced such a pressure. One of the problems we had was when we listed our holding company, which is a non-operating company. In any list which comes, we along with the NBFCs have actually been affected in terms of our share prices but from a liquidity perspective, we have had no impact at all, because at the end of the day, our portfolio is 85% micro finance. These are all short-term loans, the average tenure of which are 18 months and our funding is much more conservative than what our asset structure is.

From a liquidity point of view, there is no issue. Our only problem is because our holding company is a non-operating holding company, it gets listed with the NBFCs and consequently we have also got impacted on our share prices in this tumble.

What is the impact on the cost of funds and margins due to recent events and higher interest rate scenario? My broader question would be, are things looking tougher in terms of the kind of market share expansion that you may have planned?

In the first two quarters of this year, we have had relatively moderate growth in terms of our assets and that was deliberate because we were coming out of crisis last year. We expect that our growth in the asset side of the business is largely on the micro finance business will show dramatic growth and that also ties up with the seasonality of that business because usually on the festival season, our business grows dramatically.

We expect a very substantial growth in that business in the next two quarters. Our disbursement in April in micro finance Rs 1000 crore. We expect a very robust growth in our business in the next two quarters and in terms of funding and very frankly we have not had any issues so far because being a bank, we have multiple sources of funding avenues.

Obviously, since we have just turned into a bank, our entire liability structure is not funded with customer deposits. About 30% of our funding comes from customer deposits right now but about 40% comes from long-term borrowings either through refinance or the long-term borrowings which we have inherited from the micro finance sector.

Our liability structure is very stable and very sound and it will support the growth of the business in the next two quarters. However, the cost of funds has gone up between 20 bps and 40 bps and we expect in the next two quarters, the market rates will go up between 25 and 50 bps.

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