Gujarat, Ahmedabad 25 March 2025: Ujjivan Small Finance Bank (Ujjivan) continues to reinforce its commitment towards financial inclusion by offering one of the most competitive interest rates within the microfinance sector. With a focus on affordability, the Bank has strategically reduced its interest rates, ensuring greater financial empowerment for under-served communities in India.
Microfinance industry and Ujjivan
The microfinance industry in India has undergone significant transformation, with Small Finance Banks (SFBs) playing a crucial role in bridging the credit gap for micro entrepreneurs, low-income households, and small businesses. The recent regulatory changes introduced by the Microfinance Institutions Network (MFIN – A self-regulatory body) in July 2024, capped the number of lenders serving a microfinance borrower to four (and to three from April 2025). This move further underscored the need for responsible lending practices.
In response to these changes, SFBs have realigned their lending and collection practises to lend more responsibly, ensuring that customers are not pushed into undue indebtedness. Ujjivan, has been at the forefront of advocating responsible lending, and has further taken proactive steps to pass on the benefits of lower interest rates to its customers. Thus, aligning with its commitment to being a responsible and inclusive banking partner for the under-served communities, making borrowing more affordable and accessible for their valued customers.
Growth potential in India
India’s economic structure is showing a significant shift from a traditional pyramid to a diamond structure, with an expansion of the middle-income group from a large base of lower-income households. As per the World Economic Forum, a general classification of the annual income bracket is as follows:
- Lower-income households – (< ₹2 Lakhs)
- Aspiring middle-class – (₹ 2 – ₹ 5) lakhs
- Middle- income households – (₹5 – ₹30) lakhs
With India’s economic structure evolving, there is an increasing need for financial products that cater to the growing middle-income segment while continuing to support lower-income households. Ujjivan recognises this transformation and remains committed to bridging the financial gap by offering affordable banking and financial services.Through reduced interest rates and inclusive lending practices, Ujjivan is ensuring broader financial accessibility, helping individuals and businesses at the bottom of the pyramid achieve financial stability and progress toward upward mobility.
With SFBs growing and evolving, their role in building a financially inclusive India will only become more prominent in the upcoming years, making them indispensable to the nation’s financial ecosystem.
