Ujjivan Small Finance Bank was recently in the news when it appointed Nitin Chugh as the managing director and chief executive officer for a period of three years. Chugh will join the bank by August 2019 as president and will work closely with Samit Ghosh, existing MD and CEO, to ensure a smooth transition. Chugh will take charge as MD and CEO on December 1 upon retirement of Samit Ghosh, the current MD and CEO.
In an exclusive interview with CNBC-TV18, Ghosh talked about the appointment of the new MD and the future plans of the bank.
Here are the excerpts: Nitin Chugh will be the new managing director from December 1 this year. What are the expectations that you have from him? Will there be any change in strategy?
Nitin is going to join us after almost a year’s effort put in by the board and the management to find a successor. He obviously was our top choice. When you make a change in terms of your CEO, it is a long term change. It is almost a generational change here.
We were looking for three clear traits. Firstly, Ujjivan is a purpose-driven organisation where financial inclusion is the goal. So someone who comes in has to believe in that. Secondly, Ujjivan over the next seven years would like to become a leading mass market bank and our goal is to scale up from 4.5 million customers to 40 million customers, and that is possible only through technology changes especially in the digital area.
Thirdly, we wanted a good inclusive leader. We have a strong team here and we have been a role model for microfinance not only in India, but overseas. So those were the three traits, and Nitin was obviously number one choice. However, we are looking at him from a long term perspective.
Just a word on this listing of the small finance bank. Have you heard anything from the Reserve Bank of India? We have heard that they are looking for a new discussion paper on the non-operator financial holding company so that every institution is not made to list two institutions.
A couple of months back, we met the new governor and that was a very pleasant meeting. We had not been able to meet Urjit Patel earlier. He was ready to listen to all the issues and got an understanding of the small finance bank. All the small finance bank CEOs got together, and obviously, one of the major issues was capital structure and listing. It is not just Equitas and us who are involved in this, there are about six small finance banks who have similar or slightly different problems.
He asked us to write a paper and we did write a paper and gave it to him, and then subsequently we met Deputy Governor NS Vishwanathan in our annual meet. Vishwanathan of course has been a great mentor for the small finance bank ever since the beginning and again we discussed this issue and submitted another paper to him as a follow-up.
We are in discussions with the executive director Lily Vadera and we are hoping to meet her sometime next week to take this forward. Obviously we have to meet the criteria of listing the bank because that was a condition of the licence. But at the same time, we want to see how we can protect the interest of investors so that the dilution does not happen to that extent. We are working out and we are going to discuss it with her next week.
We had a newsbreak on Friday that a discussion paper on non-operative financial holding company is coming from the RBI and it is probably only waiting for the new government to be appointed. Is there a chance that you will not have to list two entities for the same business?
At this stage we do not know. We will find out when we meet her later this week hopefully or early next week. Even if we have to list the bank, what we are trying to aim at is only a minimum listing of 10 percent which would be required. However, if we do not have to list, that will be great, but that is a discussion we are going to have with her in the course of this week or next week.
Coming back to that earlier statement you made about taking the customer reach from 4.5 million to 40 million, by when do you plan to do that and what are the new products that you will be adding to diversify your portfolio?
Internally, we have a goal to achieve that in seven years. In terms of products, we already have the base microfinance products and we had affordable housing and MSE businesses. So, obviously we are strengthening those product lines in the MSE and housing businesses themselves.
Apart from that, we have just started on the personal loan business. We are also going to enter the vehicle finance business. This is quite apart on the liability side where we have the branch banking and all the different channels which we have in place, whether it is phone banking, mobile app banking, ATMs -- the traditional ones. Also we have different segments like in raising wholesale deposits and also to give loans to NBFCs under the financial institutions group (FIG) and then we have another group called the TASK, which looks at the trusts and NGOs and those government institutions.
We have also done a tie-up with insurance companies, and this month, we are launching a health insurance which will be focused primarily on microfinance customers, their families first. However, we have general and life insurance also, we have tie-ups with various insurance companies. So, our objective is to provide a full gamete of services which our customers require in this segment.