Shares of Ujjivan Small Finance Bank saw a significant decline on Wednesday as the Reserve Bank of India rejected its application for a universal banking license. The stock fell by 5.94% to reach an intra-day low of Rs 56.75 on the Bombay Stock Exchange, down from its previous close of Rs 60.34. This drop occurred despite a positive trend in the broader market, with the Sensex climbing over 1.6% amid optimistic global sentiment due to US-Iran peace talks.
The lender’s shares closed at Rs 58.53, marking a decrease of Rs 1.81 or 3% on Wednesday. The sharp decline followed the RBI’s decision to return the bank’s application for a universal banking license, citing insufficient diversification in its loan portfolio. The central bank advised Ujjivan Small Finance Bank to reapply after demonstrating a more balanced and diversified asset book.
This incident is the second time in recent months that the RBI has returned a similar application from a small finance bank. Ujjivan SFB’s gross loan book in the third quarter of FY26 stood at around Rs 37,057 crore, with a significant exposure of nearly 45% to group loans, indicating a continued reliance on microfinance. The RBI has been urging small finance banks to reduce their dependence on unsecured microfinance lending and expand into secured segments like housing, vehicle, and SME loans to improve asset quality and mitigate risks associated with high non-performing assets, especially during economic challenges.
