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Author: Don Obrien

The Inside Story Of A Tussle Between The Old And The New


It started well.

In May 2019, when Chugh joined Ujjivan Small Finance Bank as managing director and chief executive, he was expected to bring fresh energy to a 15-year organisation. Ghosh, on turning 70, had to step down as per RBI’s rules.

Chugh treated Ghosh like a mentor, given the latter’s 30-year long experience in banking and microfinance, recalls a former director on the bank’s board, who spoke on the condition of anonymity. Ghosh guided him whenever needed, this former director said.

The initial transition was smooth.

Chugh continued the hands-on management style prevailing in the organisation. Practices such as regular check-ins between senior and junior employees, recognition for good work and perks to incentivise performance were all retained.

But the pandemic put pressure on the business and hence the management, this director said.

The gross non-performing asset ratio for Ujjivan Small Finance Bank rose to 9.8% as of June 30, compared with 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 portfolio of risk, which includes NPAs, restructured loans and loans unpaid on due date, stood at 30% of the book as of June 30.

The rising delinquency rates, according to an official at the bank with direct knowledge of the matter, raised concerns about inadequate provisions.

The matter was raised by the parent company’s board of directors; however, action taken by Ujjivan Small Finance Bank’s management was insufficient, this official said.

“We have always been very conservative in provisioning. The provisioning over the last one year has moved up and down, which is a matter of concern at the holding company (Ujjivan Financial Services),” Ghosh told analysts last week, suggesting this was a point of strain.



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