Ujjivan SFB shares to fall today? RBI rejects bid for universal bank licence; target price

Shares of Ujjivan Small Finance Bank Ltd (Ujjivan SFB) may react negatively on Wednesday as the RBI returned its application for universal banking licence and advised it to consider applying again after demonstrating a diversified loan portfolio. In a release, post Monday's trading hours, Ujjivan SFB said the RBI acknowledged its recent efforts towards diversification of its loan portfolio. However, the apex bank was of the view that there is scope for progress in this area, it said.

Equirus Securities said the update was long awaited but the bank has unfortunately not received approval for its universal banking transition.  The stock settled at Rs 60.10 apiece on Monday. Tuesday was a public holiday. 

"We expect the stock to react negatively to this development. While the outcome is somewhat surprising—given that all quantitative eligibility criteria were met—the decision is broadly driven by subjective assessment of loan book diversification," Equirus said.

At the time of application, Equirus noted Ujjivan Small Finance Bank had 61 per cent unsecured exposure, which has moderated to 51 per cent as of March 2026. This transition, the brokerage said, itself is commendable. 

"That said, while the Reserve Bank of India has advised the bank to reapply upon achieving a more diversified loan book, the definition of “adequate diversification” lacks clarity," it said.

Equirus said it reviewed the application outcomes for peers. While AU Small Finance Bank received “in-principle” approval for its universal banking application in August 2025, Jana Small Finance Bank saw its application rejected in October 2025 due to non-fulfilment of criteria outlined in the RBI’s UBL framework. 

"Notably, Jana SFB had a secured book of 70 per cent at the time, suggesting that a higher secured mix alone may not be sufficient for approval," Equirus said.

Equirus said while we had not factored in any benefit from the Universal Bank license in its net interest margin or  profit after tax (PAT) estimates for FY27 and FY28, given the longer gestation required to realize universal banking licence benefits, it nevertheless expects the stock to react negatively to this development.

The brokerage suggested a 'LONG' rating on the Ujjivan SFB stock with March 2027 target price of Rs 75.