Jana Small Finance Bank may apply for universal bank licence this month

Jana Small Finance Bank will join AU Small Finance Bank and Ujjivan Small Finance in the list of the small finance banks that are seeking a universal banking licence from the RBI

Jana Small Finance Bank (SFB) is looking to apply to the Reserve Bank of India (RBI) for a universal banking licence this month, after it closed financial year 2024-25 (FY25) with gross non-performing assets (NPA) and net NPA ratio of below 3 per cent and 1 per cent, respectively, for two consecutive years.

 

“We will apply this quarter, most likely in May,” Jana SFB Managing Director and Chief Executive Officer (MD & CEO) Ajay Kanwal said in an interaction with Business Standard. With a universal banking licence, the price the bank is paying for deposits will come down, Kanwal said, adding that the current account savings account (CASA) ratio will also improve for the bank.

 

Jana SFB is likely to join AU SFB, and Ujjivan SFB in the list of SFBs seeking a universal banking licence from the RBI, after the central bank in 2024 announced new rules for SFBs’ conversion into universal banks. While AU SFB applied in September last year, Ujjivan SFB did so in February.

 

As per RBI guidelines, only listed SFBs are eligible to apply for a universal banking licence. To qualify, they must have a minimum net worth of ₹1,000 crore, scheduled bank status, and a satisfactory operational track record of at least five years. Additionally, they should have been consistently profitable, with gross NPA below 3 per cent and net NPA under 1 per cent over the past two financial years.

 

Jana SFB reported a gross NPA ratio of 2.5 per cent at the end of FY25 while its net NPA ratio stood at 0.9 per cent.

 

Additionally, Kanwal said that the bank is looking to achieve a mix of 80:20 secured:unsecured book in the medium term, which currently stands at 70:30, by growing the secured book faster. While the bank’s secured book grew 40 per cent year-on-year (Y-o-Y) in FY25, the unsecured book de-grew by 11 per cent during the same period.

 

Launched in 2018, Jana SFB is the fourth largest SFB in the country with 12 million customers across 23 states and two Union Territories. It’s having a total of 802 branches.