This is because the foreign shareholding rules for SFBs are the same as the foreign direct investment (FDI) one for private sector banks. At present, private banks can have foreign shareholding of up to 49 per cent through the automatic route and can go up to 74 per cent after approval from the Foreign Investment Promotion Board (FIPB). At end-December 2015, the assets under management of Ujjivan were Rs 4,540 crore and gross non-performing assets were 0.15 per cent of the total.
The management said their market share in the segment was 11.15 per cent, the third largest non-bank finance company/micro finance institution in loan disbursement as of end-September 2015.
“We are looking at starting of operations by the first quarter of the next financial year. We will be building on our strengths and also build a core banking system and treasury operations,” said Sudha Suresh, chief financial officer.
In the near term, she said, profitability at the bank might be under pressure but will benefit from the reduced cost of funding. The IPO proceeds will be used to augment the capital base. Kotak Investment Banking, Axis Capital, ICICI Securities, IIFL and Karvy are the lead book-managers.
Last year, RBI had granted SFB licences to 10 of 72 applicants. These SFBs will be similar to existing commercial lenders and will undertake basic banking activities such as accepting deposits and lending to the un-served and under-served sections.