The inner story of a standoff between the old and the new


It started well.

In May 2019, when Chugh joined Ujjivan Small Finance Bank as Managing Director and Managing Director, he was expected to bring new energy to a 15-year-old organization. Ghosh, at 70, had to resign under RBI rules.

Chugh treated Ghosh like a mentor, given his 30 years of experience in banking and microfinance, a former director of the bank’s board recalled, speaking on condition of anonymity. . Ghosh guided him whenever needed, said the former director.

The initial transition was smooth.

Chugh continued the practical management style that prevails in the organization. Practices such as regular checks between senior and junior employees, recognition of good work and incentives for performance have all been retained.

But the pandemic has put pressure on the company and therefore on management, the director said.

Ujjivan Small Finance Bank’s gross non-performing asset ratio stood at 9.8% as of June 30, down from 7.1% in March. The bank’s provision coverage ratio fell from 82% in June 2020 to 60% in March 2021. It rose to 75% at the end of the first quarter of FY22.

According to Emkay Global, the bank’s total risk portfolio, which includes NPAs, restructured loans and loans past due, stood at 30% of the portfolio as of June 30.

Rising default rates, according to a bank official with direct knowledge of the matter, raised concerns about insufficient provisions.

The issue was raised by the board of directors of the parent company; however, the actions taken by the management of the Ujjivan Small Finance Bank have been insufficient, the official said.

“We have always been very cautious in provisioning. Provisioning over the past year has fluctuated up and down, which is a concern for the holding company (Ujjivan Financial Services),” Ghosh told analysts the last week, suggesting it was a point of tension.

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