Rocked by losses, a sharp rise in bad loans and management issues, Ujjivan Small Finance Bank has put Carol Furtado in temporary charge as an officer on special duty (OSD) until 30 September. She will function as the interim chief executive from October after managing director and CEO Nitin Chugh, who resigned last week, leaves the bank.

Furtado’s interim CEO role, however, will be subject to the Reserve Bank of India’s approval. The board of Ujjivan Small Finance Bank, in parallel, will evaluate suitable candidates for the MD and CEO position, and submit two names to RBI for approval.

Ujjivan Small Finance Bank held a board meeting on Wednesday and unanimously approved the appointment of Furtado as the OSD, the bank said in a statement. She will lead the charge of handling the day-to-day operations of the bank from Thursday and will serve the bank as OSD until Chugh is in office.

Furtado, who has been associated with Ujjivan since inception, has played critical roles in the past.

"Her extensive experience, over a decade and a half, across business, operations, and HR, along with her expertise in leading Ujjivan, through various crises, make her an ideal candidate," the bank said.

Furtado has resigned as the CEO of Ujjivan Financial Services, the parent company. With the appointment of Furtado as OSD in Ujjivan Small Finance Bank, she has resigned as its CEO, Ujjivan Financial Services said in a separate filing to stock exchanges.

On account of these development, "we hereby inform that Carol Furtado who was recently appointed as the CEO of the company effective from August 13, 2021, has resigned from the position of CEO and key managerial personnel (KMP) with effect from 25 August 2021, (close of business hours)," Ujjivan Financial Services said.

Her resignation comes as she has a larger role to play at the bank which is the principal investment and sole subsidiary of the company, it added.

Ujjivan Small Finance Bank, which began operations from February 2017, recently saw high-level resignations over differences in provisioning against bad loans. A week before Chugh announced his resignation on 19 August, Harish Devarajan resigned as Additional Director (independent). Earlier, B Mahapatra had quit as Chairman of the bank in February 2021 within 10 months.

As on date, Furtado is the head of operations at the bank.

The bank, promoted by Ujjivan Financial Services founder Samit Ghosh, had reported a loss of Rs 233 crore for the June quarter compared to a profit of Rs 55 crore a year ago. Asset quality worsened with gross non-performing assets (NPAs) swelling to Rs 1,374 crore (9.8% of the advances) in June this year from Rs 139 crore (1%) a year ago. The lender’s overall stressed pool stands at 15.6% of the loan book, including restructured loans of 5.8%. The portfolio-at-risk has swelled to 30.8% (Rs 4,084 crore of its loan portfolio) as of June 2021, from 1.8% last year.

The portfolio-at-risk has swelled to 30 per cent as of June 2021.

Ghosh was earlier rejected by the shareholders for the post of MD & CEO of Ujjivan Financial Services, but continues as the Chairman.

According to a report by Emkay Global Financial Services, the bank's early-stage faltered strategy to mobilise deposits from MFI (microfinance institution) customers, lack of credible leadership to manage the liability business, and higher dependence on the vulnerable MFI business have led to its current status as a troubled small finance bank.

"The Covid-induced disruption aggravated its asset-quality problems. We believe the bank will take time to emerge from these issues and will also make its aspired transition into a universal bank difficult," Emkay said.