Jana Small Finance Bank Limited has received a reaffirmation of its CARE A rating with stable outlook from CARE EDGE Ratings on February 17, 2026. The rating applies to the bank's ₹75.00 crore Lower Tier II subordinate debt, reflecting the institution's adequate capitalisation despite ongoing challenges in asset quality and profitability.

Rating Details and Strategic Positioning

The rating reaffirmation acknowledges the bank's strategic transformation from unsecured microfinance lending to secured retail and micro, small and medium enterprise (MSME) segments. This shift has resulted in significant portfolio diversification, with microfinance loans declining to 27% of the advances book as of December 31, 2025, from 40% as of March 31, 2024.

Financial Performance and Profitability Challenges

The bank's financial performance has been significantly impacted by stress in the microfinance segment, leading to elevated credit costs and compressed profitability metrics. Return on total assets (ROTA) declined substantially across recent periods.

The deterioration in profitability stems from elevated slippages of 8.09% in FY25 and 7.65% (annualised) in 9MFY26, primarily concentrated in the microfinance portfolio. Despite these challenges, the bank maintained gross non-performing assets below 3% through strategic write-offs and accelerated provisioning.

Capitalisation and Growth Trajectory

Jana Small Finance Bank maintains adequate capitalisation levels that continue to support business expansion. The bank raised ₹462 crore through its initial public offering in February 2024, contributing to total equity infusions of ₹1,137 crore in FY24. Additionally, the institution raised Tier II capital of ₹250 crore in Q3FY26.

The bank demonstrated strong advance growth in the post-COVID period, with loan growth moderating to 19% in FY25 and 13% year-to-date in 9MFY26, primarily due to deliberate reduction in unsecured microfinance portfolio amid industry-wide stress.

Deposit Growth and Liability Profile

The bank's liability structure has undergone substantial improvement, with deposits growing 30% year-on-year to ₹33,733 crore as of December 31, 2025. The credit-to-deposit ratio improved to 93% from 103% in the previous year, indicating reduced dependence on borrowings.

However, the current account savings account (CASA) ratio remains relatively modest at 20%, with continued dependence on bulk deposits presenting funding cost challenges.

Operational Diversification and Future Outlook

The bank operates through 816 branches across 23 states and two Union territories, with no single state contributing over 14% of advances as of December 31, 2025. The secured loan portfolio comprises affordable housing loans (23%), micro loan against property including micro housing (19%), MSME loans (14%), and other diversified products.

The stable outlook reflects expectations that Jana Small Finance Bank will maintain profitable scale-up in advances and deposits while keeping asset quality under control and maintaining adequate capitalisation. The bank had applied for voluntary transition to Universal Bank status but the application was returned by RBI as eligibility criteria were not fully met.

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Jana Small Finance Bank Limited has completed the allotment of 21,608 equity shares under its Employee Stock Option Plan (ESOP) schemes, marking another step in its employee incentive program. The allotment was executed on 06th February 2026 pursuant to the exercise of options by bank employees under two distinct ESOP schemes.

ESOP Allotment Details

The share allotment was distributed across two ESOP schemes with varying exercise prices and premium structures:

The exercise pricing structure varied significantly between the two tranches. A total of 7,850 shares were exercised at Rs. 302.98 per share with a premium of Rs. 292.98 per share, while 13,758 shares were exercised at the face value of Rs. 10 per share with no premium.

Impact on Share Capital

The allotment has resulted in an increase in the bank's paid-up equity share capital:

Regulatory Compliance and Listing

The newly allotted equity shares are fully paid-up and will rank pari-passu with the existing equity shares of the bank. Jana Small Finance Bank will submit applications for listing and trading approval from both BSE Limited and National Stock Exchange Limited. The shares carry the ISIN number INE953L01027 and will be issued in demat form.

The bank filed the statement under regulation 10(b) of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 with the recognized stock exchanges on 17th July 2024. The distinctive numbers for the newly allotted shares range from 105273690 to 105295297.

Corporate Structure

Jana Small Finance Bank Limited operates from its registered office at The Fairway Business Park, Bengaluru, with CIN L65923KA2006PLC040028. The bank's shares are listed on both BSE Limited and National Stock Exchange Limited, providing liquidity to shareholders and employees participating in the ESOP schemes.