Ujjivan to cut interest rates, pass on benefits to customers

Ujjivan Financial Services Limited the microfinance lender announced interest cut on Thursday to the tune of 75 basis points with effect for October 1, 2016.

Sharing the rationale behind such a move, Sudha Suresh, CFO of the company told CNBC-TV18 that it was done with an intention to pass on the benefit to their valued customers because the borrowing costs and marginal costs of funding had gone down.

Moreover, as a non-banking finance company (NBFC) microfinance institution (MFI) they are under the margin cap, which they adhere to, said Sudha Suresh. “The RBI margin cap is 10 percent and we would like to ensure we are in compliance with margins,” she added.

However, going forward, she does not expect borrowing costs to go down any further. “We have seen a decline of almost about 100-150 basis points from the kind of borrowing costs that we had a year ago,” she said.