Shares of lender (SFB) declined up to 6% in the early morning trade on Wednesday, April 15, defying the positive trend in the Indian stock market after the Reserve Bank of India (RBI) rejected its application for a universal banking license.
Ujjivan SFB share price hit the day’s low of ₹56.75 on the BSE today, down 5.94% as against its last closing price of ₹60.34 on Monday. The Indian stock market’s benchmark index, at the same time amid renewed optimism due to the second round of peace talks between the US and Iran.
Why did RBI reject Ujjivan SFB’s application?
The on Monday rejected Ujjivan SFB’s application, citing for universal bank status, citing the need for greater diversification of its loan book.
The exchange filing stated that the RBI took note of the bank’s recent efforts towards diversifying its loan portfolio. However, the central bank was of the view that there is “scope for progress” in this area.
Therefore, RBI have returned the above-mentioned application and advised the Bank to consider applying again after demonstrating a diversified loan portfolio, the company added.
“Ujjivan will continue to embark on the path of diversification and will resubmit the application in due course, keeping RBI’s guidance in view,” the lender said in a separate statement, according to a Reuters report.
Ujjivan SFB had first applied for a transition from a small finance bank to a universal bank in February last year. The transition allows lenders to offer a wider range of services and expand the segments they are currently tapping.
According to Reuters, the central bank’s criteria for transition include a five-year track record of satisfactory performance, a net worth of ₹1,000 crore, diversified lending, meeting capital requirements, recent profitability and limited non-performing assets.
According to the company’s March quarter business update, its gross loan book stood at ₹40,655 crore, recording a growth of 26.6% year-on-year over ₹32,122 crore in the last period.
Overall deposits also witnessed a strong 21.3% YoY rise to ₹45,661 crore during the quarter under review.
Ujjivan SFB share price trend
Despite today’s fall, Ujjivan SFB shares have gained almost 12% in a month and remains 7% higher for the year. Over a longer three and five-year period, the small finance stock has jumped 113% and 96%, respectively.
Anshul Jain, Head of Research at Lakshmishree, said that Ujjivan Small Finance Bank is forming a prolonged IPO base spanning nearly 75 months, with a well-defined accumulation zone around 50 and a breakout threshold at 60 on a closing basis.
The extended base indicates strong absorption of supply, setting the stage for a structural trend reversal, noted Jain.
“Notably, recent negative news has had limited price impact, highlighting underlying relative strength and resilient demand. Price behaviour near resistance suggests compression, often preceding expansion. A decisive close above 60 would confirm a breakout, triggering momentum toward 75–90 levels in the near term. The 50–52 zone remains a critical support and invalidation band for this bullish setup,” he added.
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