RBI Rejects Ujjivan Small Finance Bank Application for Universal Bank Status

RBI Rejects Ujjivan Small Finance Bank Application for Universal Bank Status

Recently, an important development has come to light in the banking sector of India. Ujjivan Small Finance Bank stated on April 13, 2026, that the Reserve Bank of India has currently rejected its application to become a universal bank.

According to the bank, it had recently taken some steps to diversify its loan portfolio. However, the central bank believes that further improvements are still needed in this direction. For this reason, the application was not approved. After this, the regulator has advised the bank to first diversify its loan portfolio better and then apply again. The bank has also clarified that it will continue to work in this direction and will submit the application again at the right time.

In fact, becoming a universal bank from a small finance bank means that the bank can expand its scope and provide more types of services to the customers. At present, such banks mainly serve those sections that have remained away from traditional banking.

Ujjivan Small Finance Bank had applied for this change for the first time in February 2025. As per central bank norms, any small finance bank has to meet criteria like satisfactory performance of at least five years, minimum net worth of Rs 10 billion, diversified loan portfolio, adherence to capital norms, recent profitability, and low NPAs to become a universal bank.

The bank’s total loan portfolio stood at Rs 370.5 billion and deposits at Rs 422.2 billion as of December 2025, according to its latest investor presentation.

Meanwhile, AU Small Finance Bank, another bank in the same region, received in-principle approval from the central bank in August, allowing it to move towards becoming a universal bank. This entire incident makes it clear that the process of becoming a universal bank is not easy for small finance banks, and for this, they need to completely fulfil all the necessary standards.