Mumbai: In its latest inspection report the Reserve Financial institution of India has made sure observations relating to Ujjivan Small Finance Financial institutions lack of fraud administration system, score methodology and categorisation of precedence sector loans amongst many others. The financial institution has filed preliminary papers to lift Rs 1,200 crore by way of an preliminary public providing (IPO) in August.
Beneath the situation for small finance financial institution (SFB) licences issued by the Reserve Financial institution of India, SFBs shall be required to checklist after three years of operation with a capital of Rs 500 crore or above. Ujjivan will full three years of operations on January 31, 2020.
It should use the funds to enhance capital base and meet future necessities. Ujjivan Monetary Providers raised Rs 300 crore in February from a clutch of traders, together with HDFC Life and Sundaram MF, in a pre-IPO placement. The the corporate was valued at about Rs 2,000 crore on the time of the fund elevating.
The RBI inspection was carried out between January and February 2019, for monetary yr 2017-18. Within the papers filed with the inventory trade, Ujjivan mentioned that RBI identified lack of a system to tag precedence sector advances, excessive proportion of bulk deposits and focus of deposits of our high 20 depositors.
It additionally noticed that legal responsibility merchandise had been being supplied from sure centres with out RBI approval. In its draft purple herring prospectus, Ujjivan talked about RBI has identified deficiencies in AML, KYC protocols and lack of an unbiased compliance division.
The regulator observed discriminatory rate of interest on a specific date for deposit of the identical tenor and similar quantity. Additionally, the speed of curiosity talked about in sure sanction letters had been totally different from these talked about within the mortgage agreements. Ujjivan is non-optimising of core banking software program customised for micro-loans.
AU Small Finance Financial institution had a profitable itemizing final yr. Equitas Small Finance Financial institution is one other SFB trying to checklist to fulfill RBIs norms. Failing to fulfill the norms, RBI froze the pay of CEO and barred the financial institution from opening new branches.