Jana Small Finance Bank to apply for universal bank license in May
Kolkata:
Jana Small Finance Bank
has ticked all the boxes to become eligible to seek a universal banking license, making it the third lender in this space to earn this tag.
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The bank would submit the application in May, Jana managing director Ajay Kanwal told ET.
"It's a defining year for us. We have created a more stable and diversified book amid the ongoing
microfinance crisis
. We have raised the share of the secured portfolio to 70% now from 60% a year back," Kanwal said.
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The bank made an accelerated provision of Rs 305 crore in this fiscal against Rs 73 crore in the preceding one, besides regulatory provision of Rs 448 crore as against Rs 606 crore, to bring down the
net non-performing assets ratio
below 1%, which is one of the key eligibility criteria for become eligible to apply for universal bank licence.
Its net NPA stood at 0.94% at the end of FY25 as compared with 0.56% in the preceding fiscal. Its gross NPA ratio stood at 2.71% against 2.11%, below the 3% threshold as per the eligibility criteria.
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The
Reserve Bank of India
regulation says that a small finance bank needs to be listed, profitable, have a minimum Rs 1000 crore net worth and a diversified portfolio and have gross NPA and net NPA ratios below 3% and 1% respectively for the two fiscals in a row to apply for the license.
AU Small Finance Bank
and
Ujjivan Small Finance Bank
have already applied for the universal bank licence.
An upgraded licence for small finance banks would ease regulations. If granted the coveted licence, their
capital adequacy requirement
would come down from 15% while the priority sector lending target would be lower at 40% instead of 75%. The norm for having at least 50% of the loan portfolio in loans less than Rs 25 lakh would not apply anymore. A universal tag would invariably improve the branding as well.
Jana on Tuesday reported a net profit of Rs 123 crore for the fourth quarter which was 62% lower than the net profit of Rs 322 crore seen in the year ago period. Its annual profit stood at Rs 501 crore for FY25 against Rs 670 crore in the preceding fiscal.
Its operating profit for the fourth quarter was 14.3% lower at Rs 293 crore.
Its assets under management grew 19% year-on-year to Rs 29,545 crore, with secured assets growing 40% to Rs 20663 crore. Deposits grew 29% to Rs 29120 crore at the end of the last fiscal.
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