Jana Small Finance Bank Plans to Apply for Universal Bank Status

Jana Small Finance Bank is a small finance bank, headquartered in Bangalore, India. It has more than 770 banking outlets across India, its stock recently got listed in the Indian stock exchanges, NSE and BSE  on 14 February 2024 at Rs.396 after this silent listing the stock has given returns of more than 50% and currently trades at Rs.600.35  a piece.

Strong Q4 FY 2023-24 Results

The Small Finance Bank recently reported strong Q4 FY 2023-24 results on Monday. The Net Profit for the Q4 FY 2023-24 stood at Rs.321.6 crores a jump of around 300% from Rs.81 crores reported in Q4 FY 2022-23. Net interest income stood at Rs. 341.9 crores compared to Rs.280.6 crores in Q4 FY 2022-23. The Gross NPA has fallen to Rs.494.3 crores compared to Rs.709.18 crores. The Net NPA has also declined to Rs.130 crores from Rs.468 crores in Q4 FY 2022-23.

Jana Small Finance Bank is set to Apply for a Universal Bank Licence

After reporting strong Q4 FY 2023-24 results, Ajay Kanwal, The CEO of the Bangalore-based small finance bank has said that the small finance bank will apply for a universal banking licence with the Reserve Bank of India by June 2025. He further added that they are short on one parameter which is NPA. The Bank has their NNPA under 1% for one financial year and will meet this criteria by the end of the next financial year. 

As per the guidelines, small finance banks should have an NNPA of less than or equal to 1% in the last two financial years. Furthermore, they should meet the required CAGR requirements, They need to record net profit in the last two financial years and have a GNPA of less than or equal to 3% in the last two financial years.

Market Reaction

Markets have reacted heavily positively on the stock after strong results and the news of applying for a Universal Banking Licence in the next Fiscal Year, The stock has surged 20% and is currently locked in the upper circuit limit at Rs.600.35 at its new record high.

Conclusion: The Bank has reported robust Q4 results with a strong jump in its net profit and a decent decline in both NPA parameters, The company is optimistic that its NNPA will stay under 1% again for the next financial year, after which they will be applying for a Universal Banking licence. The stock currently is at its new high of Rs.600.35.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.