A STUDY ON COMPETENCY MAPPING IN UJJIVAN SMALL FINANCE BANK, BANGALORE

CHAPTER 3
INDUSRTY AND COMPANY
PROFILE
3.1 INDUSTRY PROFILE

3.1.1 INTRODUCTION TO BANKING SECTOR

A bank is a financial institution that provides banking and other financial services to their
customers. A bank is generally understood as an institution which provides fundamental banking
services such as accepting deposits and providing loans. There are also nonbanking institutions
that provide certain banking services without meeting the legal Banks are a subset of the financial
services industry. A banking system also referred as a system provided by the bank which offers
cash management services for customers, reporting the transactions of their accounts and
portfolios, throughout the day. The banking system in India, should not only be hassle free but it

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should be able to meet the new challenges posed by the technology and any other external and
internal factors. For the past three decades, India’s banking system has several outstanding
achievements to its credit. The Banks are the main participants of the financial system in India.

Before the establishment of banks, the financial activities were handled by money lenders
and individuals. At that time the interest rates were very high. Again there were no security of
public savings and no uniformity regarding loans. So as to overcome such problems the organized
banking sector was established, which was fully regulated by the government.

The organized banking sector works within the financial system to provide loans, accept
deposits and provide other services to their customers. The Banking sector offers several facilities
and opportunities to their customers. All the banks safeguards the money and valuables and
provide loans, credit, and payment services, such as checking accounts, money orders, and
cashier’s cheques. The banks also offer investment and insurance products. As a variety of models
for cooperation and integration among finance industries have emerged, some of the traditional
distinctions between banks, insurance companies, and securities firms have diminished. In spite of
these changes, banks continue to maintain and perform their primary role—accepting deposits and
lending funds from these deposits.

3.1.2 Classification of banking industry in India

Indian banking industry has been divided into two parts, organized and unorganized
sectors. The organized sector consists of Reserve Bank of India, Commercial Banks and Co-
operative Banks, and Specialized Financial Institutions (IDBI, ICICI, IFC etc.). The unorganized
sector, which is not homogeneous, is largely made up of money lenders and indigenous bankers.

3.1.3 SERVICES PROVIDED BY BANKING ORGANISATIONS

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Banking Regulation Act in India, 1949 defines banking as “Accepting” for the purpose of
lending or investment of deposits of money from the public, repayable on demand and withdrawal
by cheques, drafts, orders etc. as per the above definition a bank essentially performs the following
functions

• Accepting Deposits or savings functions from customers or public by providing bank

account, current account, fixed deposit account, recurring accounts etc.

• The payment transactions like lending money to the public. Bank provides an effective
credit delivery system for loanable transactions.

• Provide the facility of transferring of money from one place to another place. For
performing this operation, bank issues demand drafts, banker’s cheques, money orders etc. for
transferring the money. Bank also provides the facility of Telegraphic transfer or tele- cash orders
for quick transfer of money.

• A bank performs a trustworthy business for various purposes.

• A bank also provides the safe custody facility to the money and valuables of the general
public. Bank offers various types of deposit schemes for security of money. For keeping valuables
bank provides locker facility. The lockers are small compartments with dual locking system built
into strong cupboards. These are stored in the bank’s strong room and are fully secured.

• Banks act on behalf of the Govt. to accept its tax and non-tax receipt. Most of the
government disbursements like pension payments and tax refunds also take place through banks.

3.1.4 SMALL FINANCE BANK

Small finance banks are a type of niche banks in India. Banks with a small finance bank
license can provide basic banking service of acceptance of deposits and lending. The aim behind
these to provide financial inclusion to sections of the economy not being served by other banks,
such as small business units, small and marginal farmers, micro and small industries and
unorganized sector entities.

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Existing non-banking financial companies (NBFC), microfinance institutions (MFI) and

local area banks (LAB) can apply to become small finance banks. They can be promoted either by
individuals, corporate, trusts or societies. They are established as public limited companies in the
private sector under the Companies Act, 1956. They are governed by the provisions of Reserve
Bank of India Act, 1934, Banking Regulation Act, 1949 and other relevant statutes.

The banks will not be restricted to any region. They were set up with the twin objectives
of providing an institutional mechanism for promoting rural and semi urban savings and for
providing credit for viable economic activities in the local areas. 75% of its net credits should be
in priority sector lending and 50% of the loans in its portfolio must in ₹25 lakh range. The firms
must have a capital of at least ₹100 crores. The promoters should have 10 years' experience in
banking and finance. The promoter’s stake in the paid-up equity capital will be at least 40%
initially but must be brought down to 26% in 12 years. Joint ventures are not permitted. Foreign
shareholding will be allowed in these banks as per the rules for FDI in private banks in India. At
net worth of ₹500 crores, listing will be mandatory within three years. Small finance banks having
net worth of below ₹500 crores could also get their shares listed voluntarily.

3.2 COMPANY PROFILE

3.2.1 UJJIVAN SMALL FINANCE BANK

It all started with an aim, an aim to value the true potential of real India. The people that
strive day in and day out to run one of the largest agrarian economies in the world are residents of
villages and districts where financial stability is still at an arm’s length.

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 A STUDY ON COMPETENCY MAPPING IN UJJIVAN SMALL FINANCE BANK, BANGALORE

In 2015, Ujjivan Financial Services set out on a mission to utilize the full potential of the
financially unserved population by aiding their development to procure a brighter future.

Ujjivan received the final license from the Reserve Bank of India on 11th November 2016, which
allowed us to set up Small Finance Bank business in India with an experienced team of members
ranging from ex-CEO’s of leading nationalized banks and advisors to various financial
organizations in the country. We believe in trusting the abilities, ambitions & dreams of our
customers and strived to work for their development, one step at a time.

“A license authorizing the bank to carry on small finance bank business has been obtained from
the RBI in terms of section 22 of the BR act 1949. It must be distinctly understood, however, that
in issuing the license ,the Reserve Bank of India does not undertake any responsibility for the
financial soundness of the bank or for the correctness of any of the statements made or opinion
expressed in this connection.“

3.2.2 VALUE AND CULTURE

Ujjivan Small Finance Bank, strive to abide by the following values and imbibe them within every
aspect of our organization:

• Customer's choice institution

• Integrity in all dealings
• Provide responsible finance
• Fair with suppliers and service partners
• Compliance of laws, regulations and code of conduct
• Best place to work
• Professionalism and Teamwork
• Respected in the community

After successfully establishing their presence across 24 states by February 2017, Ujjivan small
finance bank strives to go deeper into the problems of the unserved population by enabling their
financial stability.

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 A STUDY ON COMPETENCY MAPPING IN UJJIVAN SMALL FINANCE BANK, BANGALORE

With a strategic partnership with the Parinaam foundation, Ujjivan tries to educate and empower
the various sections of rural India through social welfare; healthcare, education, vocational
training, community development, shelter, and disaster relief, to enable customers lead a "better
life"

3.2.3 MISSION

“THE BEST INSTITUTION TO PROVIDE FINANCIAL SERVICES TO THE

UNSERVED AND UNDESERVED CUSTOMERS AND TRANSFORM TO A MASS
MARKET BANK”

3.2.4 MANAGEMENT TEAM

• SAMIT GHOSH - Chief Executive Officer and Managing Director

• SANJAY KAO - Chief Business Officer
• CAROL FURTADO - Head of Human Resources
• ARUNAVA BANERJEE - Chief Risk Officer
• JAYA JANARDANAN - Chief Operating Officer
• UPMA GOEL - Chief Financial Officer
• ALOK CHAWLA - Head of Audit
• JOLLY ZACHARIAH - Head of Channels
• RAJAT KUMAR SINGH - Business Head of Micro banking and Personal Loan

3.2.5 REGULATORY POLICIES

• Dividend Distribution Policy

The objective of the Policy is to appropriately reward shareholders through dividends for
reposing their confidence in our bank while retaining the capital required for supporting future
growth.

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• Cheque Collection Policy

Ujjivan Small Finance Bank is committed to providing responsible and best in class financial
services to its customers. Customer Service is the key focus area of USFB following a holistic
approach targeting consistent improvement in customer experience and quality of operations.
Keeping in view the regulatory guidelines, USFB has formulated a comprehensive and transparent
cheque collection policy.

• Comprehensive deposit policy

One of the important functions of the Small Finance Bank is to accept deposits from the
underserved sections of the society for the purpose of lending. In fact, such depositors are the
major stakeholders of our Banking System. The depositors and their interests form the key area of
the regulatory framework for banking in India and this has been enshrined in the Banking
Regulation Act, 1949. The Reserve Bank of India is empowered to issue directives / advices on
interest rates on deposits and other aspects regarding conduct of deposit accounts from time to
time. With liberalization in the financial system and deregulation of interest rates, banks are now
free to formulate deposit products within the broad guidelines issued by RBI.

• Corporate Social Responsibility

Ujjivan Small Finance Bank’s (USFB or the Bank) mission and objective is to provide full
range of financial services to the economically active poor to enable customers lead a better life
and reaching out to underserved communities. The Companies Act 2013 has introduced provisions
on Corporate Social Responsibility (CSR), which rests on the ideology of give and take.

• Customer Compensation Policy

Ujjivan Small Finance Bank (USFB or the Bank) believes in fair treatment of its customers
and providing responsible finance to the lesser served sections of the society. The Bank promotes
ethical behavior based on the principles of integrity and transparency by staff towards its
customers. The Bank seeks to offer its customers quality services and shall endeavor to ensure that
the customers do not face any challenges while utilizing any products or services.

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• Nomination and Remuneration Policy

Ujjivan Small Finance Bank (Bank) recognizes its role as a corporate citizen and endeavors to
adopt the best practices and the highest standards of Corporate Governance through transparency
in business ethics, accountability to its customers, government and other shareholders. The Bank’s
activities are carried out in accordance with good corporate practices and the Bank is constantly
striving to better them and adopt the best practices. This policy seeks to document the practices
and procedures to be followed by the Bank for appointment of directors and their remuneration.

• Policy on Collection of Dues & Repossession of Security

The debt collection policy of the Ujjivan Small Finance Bank Ltd. (USFBL) is based on
principles of dignity and respect to customers. The USFBL believes in following fair practices
with regard to collection of dues and repossession of security thereby fostering customer
confidence and long-term relationship and thereby ensuring that no coercive practices are followed
while collecting the dues. The repayment schedule for any loan sanctioned by USFBL is fixed
taking into account repayment capacity and cash flow pattern of the borrower. The USFBL
explains to the customer upfront the method of calculation of interest and how the Equated
Monthly Instalments (EMI) or payments through any other mode of repayment are appropriated
against interest and principal due from the customers. The USFBL expects the customers to adhere
to the repayment schedule agreed to and approach it for assistance and guidance in case of genuine
difficulty in meeting repayment obligations.

• Policy on frequent dishonor of cheques

The Cheque Collection policy provides guidelines for the process to be followed for return/
dispatch of dishonored cheques and the process for dealing with incidents of outward clearing
cheque return. This policy records guidelines to be followed on frequent return of inward clearing
cheque in a customer account for an amount equal to 1 crores and above and in cases where
cheques are for an amount below 1 crores.

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