Ujjivan Small Finance Bank Reaffirms Credit Ratings with CARE Ratings

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:


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%.

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