Collection efficiency has improved from June to July, said Nitin Chugh, MD and CEO, Ujjivan Small Finance Bank, adding that most borrowers are returning to their livelihoods. In an interaction with BusinessLine , he also spoke about the bank’s growth and expansion plans, which have been partly impacted by Covid-19. Excerpts:

What are the collection trends? Do you think the moratorium should be extended?

Collection efficiency has improved from June to July. As of June, we have 47 per cent under moratorium. We are firmly on the side that says that moratorium should not be extended. All small finance banks have a view that there should not be an extension to the moratorium. Economic activity has come back when we look at high frequency data. It doesn't seem that there is a need to extend the moratorium other than in sectors where there could be a sustained period of problems, which is very specific.

How is your micro finance book doing?

We slice MFI by occupation type and since it is largely women borrowers, we don’t have the challenge of migrant labour. Amongst occupation types, people in rural areas who work in groceries, essential services are better off as their incomes weren’t disrupted too much. But sectors like restaurants, or occupations like housemaids, tailoring and driving are still impacted and collection efficiency is lower. The bulk of our portfolio or a little more than 50 per cent is in essential services. So we are seeing the situation improve and there are fewer people who have not returned to their livelihoods.

How are advances growing?

On a year on year basis, we have grown, while on a quarterly basis, the book is almost the same. We are in our growth phase and on an annual basis, you will continue to see growth in the first two to three quarters. We have started disbursals from May onwards in the form of top-up loans, emergency loans to our customers and we extended that in June and July. Disbursals are going up — we have come to levels of nearly 30 per cent of pre-Covid numbers. We are being selective in disbursals, carefully dealing with existing customers rather than acquiring new customers.

Are you looking at further capital raise?

We are more than well capitalised at 28.68 per cent capital adequacy ratio compared to the regulatory requirement of 15 per cent. Our problem is of a different kind — how do we deliver a good RoE. We raised IPO money as growth capital of ₹1,000 crore but we were sure we would use it for two-and-a-half years, which can now extend to three years as the first quarter has been impacted by Covid.

How has Covid impacted growth plans?

We want to grow but how much we can will be clear only by the end of the second quarter. We continue to be in the growth and scale-up phase. We are doing things on how to run the business differently. We have done a lot of work on the digital side in the last three to four months. We are getting into a lot of partnerships with fintechs as that will help us scale up our distribution. This is also a good time to transform some of our business and work flows.