Jana Small Finance Bank and Ujjivan Small Finance Bank are poised for a smoother transition to universal banks, potentially avoiding the need to ring-fence promoters, unlike their counterpart AU Small Finance Bank.

Contrasting Ownership Structures

Jana Small Finance Bank already operates through a listed holding company structure, which aligns with regulatory preferences. On the other hand, Ujjivan Small Finance Bank has achieved full public ownership with zero promoter stake following a reverse merger of its holding company last year.

This stands in contrast to AU Small Finance Bank, which received in-principle approval from the Reserve Bank of India (RBI) with specific conditions. The RBI directed AU SFB to set up a holding company and transfer promoter shares, as promoter Sanjay Agarwal and associates currently hold a 22.85% stake in the bank.

Timeline of Universal Banking License Applications

The race for universal banking licenses among small finance banks is gaining momentum:

• Jana Small Finance Bank applied for the license in June
• Ujjivan Small Finance Bank submitted its application in February
• AU Small Finance Bank is set to apply in September 2024

Benefits of Transitioning to Universal Banks

The transition from small finance banks to universal banks comes with several advantages:

1. Reduced Capital Adequacy Requirements: Capital adequacy requirements will decrease from 15.00% to 11.50%, potentially freeing up capital for growth and expansion.

2. Lower Priority Sector Lending Targets: The mandatory priority sector lending targets will be reduced from 60.00% to 40.00%, offering more flexibility in loan portfolio management.

3. Removal of Loan Size Restrictions: The requirement for 50.00% of loans to be under ₹25 lakh will be eliminated, allowing for a more diverse loan book.

These changes are expected to provide the banks with greater operational flexibility and the ability to serve a broader range of customers and business segments.

As Jana and Ujjivan progress towards universal banking status, their existing ownership structures may prove advantageous in navigating regulatory requirements. This development highlights the evolving landscape of India's banking sector and the ongoing transformation of small finance banks into full-fledged universal banks.

Jana Small Finance Bank Limited has announced a significant addition to its leadership team with the appointment of Mr. Rakesh Joshi as an Additional Director in the capacity of an Independent Director. The appointment, effective August 27, 2025, marks a strategic move for the bank as it brings on board a seasoned professional with over four decades of experience in the banking and financial services sector.

Appointment Details

The bank's board has approved Mr. Joshi's appointment for a term of five years, subject to the approval of shareholders. This decision was disclosed in a regulatory filing to the National Stock Exchange of India and BSE Limited, in compliance with SEBI regulations.

Rakesh Joshi's Extensive Experience

Mr. Rakesh Joshi brings a wealth of experience to Jana Small Finance Bank, with a career spanning 41 years across various facets of the financial industry:

• Diverse Expertise: His experience covers wholesale banking, retail banking, investment banking, and insurance sectors.
• Regulatory Background: Prior to this appointment, Joshi served as a Whole Time Member (Finance and Investments) at the Insurance Regulatory and Development Authority of India (IRDAI), retiring in December 2023.
• Market Insights: With 15 years in front office roles, Joshi has held positions from Junior Trader to Chief Dealer, gaining deep insights into markets and Asset-Liability Management (ALM) organizations.
• Strategic Leadership: Throughout his career, Joshi has been instrumental in designing and restructuring systems and procedures, contributing to growth and profitability improvements across institutions.

Professional Profile

Mr. Joshi's appointment brings several key strengths to Jana Small Finance Bank:

• Financial Acumen: His extensive experience in trading and treasury operations provides a nuanced understanding of financial instruments, risk dynamics, and market behavior.
• Regulatory Expertise: His recent role at IRDAI involved overseeing critical financial and investment frameworks within the insurance sector, contributing to policy formulation and sectoral stability.
• Strategic Vision: Joshi's track record includes delivering measurable improvements in operational efficiency and financial performance across various institutions.

Compliance and Governance

Jana Small Finance Bank has confirmed that Mr. Rakesh Joshi is not related to any existing directors of the bank. Furthermore, the bank stated that Joshi has not been debarred from holding the office of director by any regulatory authority, including SEBI.

The appointment of Rakesh Joshi as an Independent Director is expected to bring valuable insights and strategic direction to Jana Small Finance Bank, leveraging his extensive experience in the financial services sector. This move aligns with the bank's commitment to strengthening its governance and expanding its expertise in navigating the evolving landscape of banking and finance.