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When investors learned that Jana Small Fin Bank intended to submit an application for a universal bank license by May June 2025, the lender’s stock reached a 20 percent upper circuit at Rs 600.35 on April 30. This caused investors to express their delight.

Several days after the Reserve Bank of India (RBI) issued a circular about the voluntary transition of Small Finance Banks to Universal Banks, this new development has taken place. Additional requirements were added in the circular for financial institutions that were interested in making this move.

What Does Bank Authorities of Small fin bank Jana have to Say?

In an interview with Moneycontrol, Ajay Kanwal, the Managing Director and Chief Executive Officer of Jana Small Finance Bank, revealed that the lender was lacking one criteria, which is non-performing assets (NPA). This was mentioned by Kanwal. For one fiscal year, we have maintained a net nonperforming asset (NNPA) ratio that is lower than one percent, and we will achieve the requirements by the end of the next fiscal year. According to Kanwal, “We will submit a formal application by the time May-June 2025 rolls around.”

Small financing banks are required to keep their net non-performing assets (NNPA) ratio at one percent or lower in the most recent two financial years, as stipulated by the standards provided by the Reserve Bank of India (RBI). In addition, companies must meet the prescribed compound annual growth rate (CAGR) criteria, display a positive net profit in the two financial years prior to the current one, and keep their gross non-performing assets (GNPA) at a level of three percent or lower in the two most recent financial years.

As an additional requirement, the guidelines stipulate that a small finance bank must have a sufficient track record of performance for a minimum period of five years, be listed on exchanges, and have a minimum net value of one billion rupees as of the end of the previous quarter.

The most recent information provided by the bank indicates that its standalone net worth was at Rs 3,577 crore, which is higher than the requirement that was established by the guidelines of the RBI. The percentage of Jana Small Finance Bank’s gross non-performing assets (GNPA) was 2 percent in FY24, 3.2 percent in FY23, and 5 percent in FY22. This indicates that the bank’s asset quality has improved over the years. It was found that the NNPAs for the same time periods were 0.4 percent, 2.4 percent, and 3.4 percent, respectively.

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