Why Did RBI Return Jana Small Finance Bank’s Universal Bank License Application?
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Synopsis
Jana Small Finance Bank's bid to become a universal bank has hit a roadblock as the RBI returns its application. This decision raises questions about the bank's compliance with eligibility criteria and its future growth. Stay informed as we explore the implications for investors and the banking sector.
Key Takeaways
- RBI's stringent eligibility criteria are crucial for banking stability.
- Jana SFB must address compliance issues to pursue future growth.
- Market reactions reflect investor confidence in regulatory standards.
- The bank's financial performance shows resilience despite challenges.
- Continued focus on maintaining low NPAs is essential for sustainability.
Mumbai, Oct 28 (NationPress) Jana Small Finance Bank (SFB) announced on Tuesday that the Reserve Bank of India (RBI) has returned its application to convert into a universal bank due to the failure to meet the necessary eligibility criteria.
The bank had submitted its application earlier this fiscal year (FY26) after complying with one of the primary conditions outlined by the RBI—keeping gross non-performing assets (NPAs) below 3 percent and net NPAs under 1 percent for two consecutive years.
However, the central bank indicated that other eligibility requirements were not satisfied, resulting in the return of the application.
“Following our letter dated June 9, we wish to inform that the RBI has returned the application for voluntary transition to a universal bank due to non-compliance with the criteria specified in the RBI circular,” the Bengaluru-based lender noted in its stock exchange announcement.
In the wake of this update, shares of Jana SFB dropped by 2.14 percent, settling at Rs 446.4 on the BSE.
Over the past five days, the stock had seen an increase of Rs 9.40 or 2.14 percent, yet it has experienced a decline of Rs 7.05 or 1.55 percent over the last month.
Within the last six months, Jana SFB’s shares have decreased by Rs 68.95 or 13.35 percent. On a year-to-date (YTD) basis, however, the stock remains up by Rs 43.90 or 10.87 percent.
Founded in 2018, Jana Small Finance Bank is the fourth-largest small finance bank in India, catering to over 12 million customers across 23 states and two Union Territories through 802 branches.
In the second quarter of FY26, the bank reported a net profit of Rs 75 crore, bringing its first-half profit to Rs 177 crore.
The bank's net interest margin (NIM) stood at 6.6 percent, while its gross NPAs were 2.8 percent and net NPAs were 0.9 percent.
Point of View
It is essential to recognize the implications of the RBI's decision on Jana Small Finance Bank. This move reflects stringent regulatory standards that ensure the stability of the banking sector. While the bank's efforts to grow are commendable, adherence to regulatory criteria remains paramount for sustainable development.
NationPress
28/10/2025
Frequently Asked Questions
Why did the RBI return Jana Small Finance Bank's application?
The RBI returned the application due to the bank's non-fulfilment of certain eligibility criteria required for transitioning to a universal bank.
What are the eligibility criteria for becoming a universal bank?
Key eligibility criteria include maintaining gross NPAs below 3% and net NPAs under 1% for two consecutive years, among other factors.
What has been the impact on Jana SFB's shares?
Following the announcement, Jana SFB's shares fell by 2.14% on the BSE.
How has Jana SFB performed financially in recent quarters?
In the second quarter of FY26, Jana SFB reported a net profit of Rs 75 crore, with a first-half profit of Rs 177 crore.
What is the significance of Jana SFB in the Indian banking sector?
Established in 2018, Jana SFB is the fourth-largest small finance bank in India, serving over 12 million customers.
