BENGALURU: After the pandemic, the banking sector has been seeing high attrition levels that it has never witnessed before.
"As an industry, attrition levels used to be at the lower end of 20%, but it is now between 25-30%. If it comes down, it is good for the whole industry," said Ujjivan Small Finance Bank (SFB) MD and CEO Ittira Davis.
In an interaction with TNIE, he said one of the main reasons for this high attrition is, "Banks are all trying to grow, opening new branches, where do they get people? from each other or from SFBs because we have good training programmes also."
In November last year, RBI Governor Shaktikanta Das expressed concern over high attrition rates in certain private sector banks.
In the present fiscal, the small finance bank has opened close to 100 branches. Going forward, the SFB believes that it has to be a combination of digital and bank branches. "We will open a few branches every year, but we are trying to balance that with digital," he said.
Ujjivan SFB will also add gold loan and four-wheeler vehicle finance to its offerings soon.
"We will continue to add new products. Our entry into this offering is mainly for our existing customers. Also, we have done vehicle finance in a small way, focusing on our existing customers mainly on two-wheelers, but now from the next fiscal, we will add four-wheeler finance too," he said.
During Q3, its disbursements stood at Rs 5,675 crore. The SFB's housing product is also doing well. Its affordable housing continues to grow, it disbursed Rs 595 crore for the quarter, up 73% YoY. In Q3 FY24, its Net Interest Income (NII) stood at Rs 860 crore, up 23% YoY and Net Interest Margin (NIM) at 8.8%.
Over next three years, the Bengaluru-headquartered lender is planning to increase its secured loan portfolio to about 40% from the present 29%.
"The idea is that in the next three years, we should have a more balanced portfolio of 60:40 between unsecured and secured loans," he said.
Davis will step down from his role in the next fiscal and the process of finding the right person is on. “Hopefully in the near term, we will have some announcement. As we get into the new financial year, we have to find the right person,” he said.
On the reverse merger of Ujjivan Financial Services with the SFB, Davis said the process should be completed in a month or two.
Talking about the present regulatory environment, the CEO said the Reserve Bank of India is doing a couple of things- customer protection, which is a good thing and necessary, on the other front, the central bank is also providing guidance to the economy.
Referring to the phrase used by the US Federal Reserve Chairman Alan Greenspan in the 1990s, "irrational exuberance", he said it summarises a lot of things, this irrational exuberance which many banks can get into has to be curbed as it can give rise to practices which are not good for the economy.
"Their approach has changed from what it was two to three years ago. Every regulator has a way to test different ways to manage that. We have to be ready for different ways to address issues," he said.