RBI Returns Jana Small Finance Bank's Bid For Universal Bank License
The Bengaluru-headquartered lender had applied to transition from a small finance bank to a universal bank in June this year.
The Reserve Bank of India has returned Jana Small Finance Bank Ltd.'s application for voluntary transition to a universal bank due to non-fulfilment of its criteria, the lender said on Tuesday.
The Bengaluru-headquartered lender had applied to transition from a small finance bank to a universal bank in June this year.
The application was made in compliance with the RBI guidelines for 'on tap' licensing of small finance banks in the private sector, issued on Dec. 5, 2019, and in accordance with the RBI circular on the voluntary transition of small finance banks to universal banks, on April 26, 2024.
The RBI guidelines state that a small finance bank looking to transition to universal bank is required to maintain a minimum net worth of Rs 1,000 crore in the last quarter, have a net profit for the last two financial years, have a gross non-performing asset ratio of 3% or less and a net NPA ratio of 1% or less in the last two financial years.
The failure to get approval may have a potential impact on growth ambitions and trigger a valuation rerating for Jana Small Finance Bank. The focus will likely remain on core SFB operations in the near term.
The bank reported a 22.5% year-on-year plunge in net profit to Rs 74.9 crore in the September quarter. Net interest income rose 4% to Rs 618 crore.
Net NPA was flat at 0.94% and gross NPA improved to 2.87% from 2.91% in the previous quarter.
The company started as an NBFC focused on microfinance. The small finance bank was launched in March 2018.
In August, AU Small Finance Bank Ltd. received the RBI's in-principle approval to transition into a universal bank.
Ujjivan Small Finance Bank Ltd.'s approval remains pending. Managing Director and Chief Executive Officer Sanjeev Nautiyal recently said the bank is hoping to land a decision from the RBI by December.
Small finance banks have previously requested the central bank to allow them to drop the word 'small' from their name to be able to better garner deposits. However, the regulator has denied this request, instead keeping the license route open.
