Ujjivan Small Finance Bank Reaffirms Credit Ratings with CARE Ratings
Ujjivan Small Finance Bank Limited (USFB) announced that Care Ratings Ltd. has reaffirmed its ratings as part of a press release dated March 23, 2026. The reaffirmation considers the bank’s comfortable capitalization and improving scale of its loan book, supported by increasing diversification.Here's a breakdown of the reaffirmed ratings:
| Facilities/Instruments | Amount (Rs. Crores) | Rating | Rating Action |
|---|---|---|---|
| Long-term bank facilities | 500 | CARE AA-; Stable | Re-affirmed |
| Subordinated non-convertible debentures | 500 | CARE AA-; Stable | Re-affirmed |
| Fixed Deposit | 10000 | CARE AA-; Stable | Re-affirmed |
According to Care Ratings, USFB’s advances rebounded to 15% in 9MFY26, led by sustained traction in secured lending and a gradual recovery in microfinance. The bank is actively reducing its reliance on micro-banking (52% share) by increasing the proportion of secured loans, which rose to 48% of the loan book as on December 31, 2025 (March 31, 2025: 44%) and is targeted to increase to 60-65% over the medium term.
Slippages increased to 4.21% in FY25 and 3.60% in 9MFY26 (FY24: 2.25%), but the bank has maintained gross non-performing assets (GNPA) and net NPA (NNPA) below 3% and 1%, respectively. Profitability, impacted by margin compression, elevated credit costs, and higher operating expenses, resulted in a return on total assets (ROTA) of 1.66% in FY25 and 1.10% in 9MFY26, compared to 3.50% in FY24.
Rating Sensitivities:
Positive factors:
- Significant scale up of the business and profitability accompanied by a meaningful diversification into a secured asset class.
- Sustained improvement in the CASA proportion resulting in lower cost of funds.
Negative factors:
- Significant deterioration in profitability with ROTA remaining below 1% on a sustained basis.
- Material deterioration in the asset quality.
- Capital adequacy ratio (CAR) remaining below 18% on a sustained basis.
The stable outlook reflects the likely continuation of comfortable capitalization despite near-term pressures on profitability and asset quality. As of December 31, 2025, the overall CAR stood at 21.62% and the Tier-I CAR at 20.13%.
Source:
Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
The information provided is for general informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any securities. Readers are advised to rely on their own assessment and judgment and consult appropriate financial advisers, if required, before taking any investment-related decisions.
Any views, opinions, or statements expressed, where applicable, are those of the respective analysts or experts and do not reflect the views of this website. The website has no association with such viewpoints and does not assume any responsibility for them.