Shares of Jana Small Finance Bank hit 20 percent upper circuit at Rs 600.35 on April 30 as investors rejoiced the lender's plans to apply for a universal bank license by May-June 2025.
The development comes a few days after the Reserve Bank of India (RBI) released a circular regarding the voluntary transition of Small Finance Banks to Universal Banks. The circular introduced additional criteria for banks interested in making this transition.
In an interaction with Moneycontrol, Ajay Kanwal, Managing Director and Chief Executive Officer of Jana Small Finance Bank, stated that the lender was lacking one parameter, which is non-performing assets (NPA). "We have had our net NPA (NNPA) under percent for one financial year and we will meet the criteria by the end of next financial year. And we will make a formal application by May-June 2025," Kanwal stated.
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According to RBI guidelines, small finance banks must maintain a net non-performing assets (NNPA) ratio of 1 percent or less in the last two financial years. Additionally, they should fulfill the prescribed compound annual growth rate (CAGR) criteria, demonstrate a positive net profit in the preceding two financial years, and maintain gross non-performing assets (GNPA) at 3 percent or below in the last two financial years.
Further, the guidelines also call for a small finance bank's satisfactory track record of performance for a minimum period of five years, listing on exchanges, and a minimum net worth of Rs 1,000 crore as of the end of the previous quarter.
According to the bank's latest data, its standalone net worth was at Rs 3,577 crore, which exceeds the requirement set by the RBI's guidelines. In terms of asset quality, Jana Small Finance Bank's gross non-performing assets (GNPA) were 2 percent in FY24, 3.2 percent in FY23, and 5 percent in FY22. The NNPAs for the same periods were 0.5 percent, 2.4 percent, and 3.4 percent, respectively.
The lender also made its market debut in February 2024. Since its listing, shares of Jana Small Finance Bank have surged around 63 percent.
Also Read | MC Exclusive: Jana Small Finance Bank to apply for universal bank license by May-June 2025, says CEO
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