Jana Small Finance Bank Awaits Crucial RBI Nod for TVS Group Investment Amid Regulatory Hurdles

Jana Small Finance Bank Awaits Crucial RBI Nod for TVS Group Investment Amid Regulatory Hurdles​

Jana Small Finance Bank is currently awaiting approval from the Reserve Bank of India (RBI) to facilitate a significant capital infusion from the TVS Group. Managing Director and Chief Executive Officer Ajay Kanwal confirmed that while the investment is planned, the specific timeline for the funds remains unclear at this stage.

The lender has already secured capital from a non-TVS group investor as part of its broader capital raise efforts. However, the specific fees associated with the TVS Group involvement will only be realized once regulatory clearance is obtained.

In May, the TVS Group reached an agreement to acquire up to a 9.99 percent stake in Jana Small Finance Bank. This transaction involves a combination of preferential allotment of equity warrants and a secondary share purchase, though it remains subject to ongoing regulatory approvals.

Strategic Stake Ownership and Capital Structure​

The ownership structure includes a minority 4.57 percent stake held by a holding company owned by Shruti Lohia. She is the daughter of SP Lohia, the founder of Indo Rama Corporation.

The current regulatory delays occur while the bank manages repayment defaults by promoter entities Jana Holdings and Jana Capital Ltd (JCL). These defaults pertain to non-convertible debentures (NCDs) following an extension of the repayment tenor from June 30 to December 30.

Ajay Kanwal clarified that resolving the NCD default at Jana Holdings is contingent on the monetization of the holding company's stake in the bank. He emphasized that the holding company possesses no other business operations and will pay back NCD holders based on the value of the shares when sold.

Universal Banking License Status and Regulatory Context​

Jana Small Finance Bank maintains its intention to apply for a universal bank licence, although the timeline for reviving the application remains undefined. The RBI previously returned the bank's application in October 2025 due to the non-fulfillment of specific criteria.

The regulatory environment remains competitive as other institutions face similar hurdles. For instance, Ujjivan Small Finance Bank saw its application returned earlier this year. Currently, AU Small Finance Bank stands as the only small finance bank with in-principle approval for a bank licence.

Kanwal noted that the bank must resolve internal issues before announcing a new plan for the universal banking application. The management team is currently focused on addressing these pending matters before proceeding with a formal resubmission of the license request.

Deposit Growth and FY27 Profitability Outlook​

The lender reported a slower pace of deposit growth during the June quarter, attributing this to a deliberate reduction in bulk deposits. The bank also opted against aggressive interest rate hikes despite a highly competitive funding environment.

Management believes the bank remains on track to meet its FY27 targets, bolstered by a recovery in its microfinance portfolio. This stability is expected to help the lender navigate the softer deposit mobilization seen during the April-May period when market conditions were tight.

The bank expects to maintain net interest margins of approximately 7.5 percent for the fiscal year. Additionally, management projects achieving a return on assets (ROA) within the range of 1.3 to 1.4 percent as it continues its growth trajectory.