Jana SFB chief rules out plans of reverse merger with promoter Jana Holdings

"If we were to look at credit card space, it would be more in the MSME space and not retail space. Also we will look at something on UPI credit card which will be more cost effective," Kanwal said.

Bengaluru-based Jana Small Finance Bank has no plans of a reverse merger with promoter Jana Holdings Limited, managing director and chief executive officer Ajay Kanwal said.

The bank had crafted a plan earlier to work out a reverse merger with the promoter, which holds 22.54 percent stake in it. “Earlier we did have a plan, but now we have no such plans,” he said in an interaction with Moneycontrol.

In the first quarter of fiscal 2025, the bank reported an 89 percent jump in net profit to Rs 171 crore. "The bank reported a growth in overall deposits and current account and savings account (CASA) deposits, secured assets. Our unsecured portfolio fell on a sequential basis and asset quality worsened due to factors around heatwave and elections," Kanwal said.

The bank now plans to launch the creditline on unified payments interface (UPI) if and when it secures a go-ahead from the regulator.

Excerpts from the interaction.

What are your takeaways from the Q1FY25 numbers?

The first reporting quarter is always tough. Our profit for the quarter jumped 89 percent to Rs 171 crore and saw a robust growth. The growth in overall deposits and current account and savings account (CASA) deposits, secured assets is strong for the bank.

We did see some pressure on our asset quality, which worsened in the quarter due to factors around heatwave and election season. Our return on asset (RoA) climbed over to 2.1 percent in this quarter.

On the unsecured business of your bank, what is the strategy going ahead?

Our unsecured portfolio fell on a sequential basis as we are not looking to grow aggressively in the sector. This segment has never been a growth driver for us. Our business correspondents faced some pressure towards growing the unsecured book in this quarter.

Is there anything happening on the reverse merger with your promoter?

Our promoter has only around 22.54 percent stake in the bank, and it is not a significant one. So it is not a big shareholding that you need to know the solution to and can only be possible.

Earlier we did craft a plan for a reverse merger and to give the holding company shareholding and exit but now we have no plans.

How is your gold loan portfolio working?

We reported robust growth in our gold loan portfolio and we do our business with our existing microfinance customers. And we are expecting that our gold loan portfolio will continue to grow.

How do you see the credit card segment? Will Jana SFB plan to enter the segment?

We have no plans for at least the next two years to enter the credit card space. Our plan is to provide a host of services and it will make us the top three in the business and then we will look at doing something new.

And later, if we were to look at the credit card space, it would be more in the MSME space and not retail space. Also, we will look at something on UPI credit card which will be more cost-effective.

Also, we would look at entering the credit line on UPI if permitted by the regulator for SFBs.