Jana Bank launches commercial operations
MUMBAI: Jana Small Finance Bank on Wednesday announced the commercial launch of its banking operations, the last microfinance company to convert itself into a small finance bank (SFB), three years after the Reserve Bank of India (RBI) gave its in-principle approval.
The Bengaluru-based small finance bank, which was earlier called Janalakshmi Financial Services and weathered huge losses on account of demonetization, said it is confident of turning profitable before the end of fiscal year 2019.
“Because of the delayed launch, the bank has lost many customers. I don’t see a challenge on how we will grow, even though we are last, because the market still is underbanked. We have 45 lakh MFI (microfinance institution) customers, 600 store fronts and 15,000 employees. Jana was the largest MFI. It should be able to churn quickly,” said Ajay Kanwal, managing director and chief executive officer, Jana Small Finance Bank.
Jana was the worst affected during demonetization when it saw its asset quality slip, leading to capital erosion. The MFI had reported losses to the tune of ₹3,400 crore at the end of March 2018.
Even as it received its final licence in April last year, Kanwal said it waited to complete the ₹2,000 crore capital infusion before it started commercial operations. The bank’s capital adequacy ratio at the end of March 2018 stood at 35%.
Rating agency Crisil had recently downgraded its ratings on the bank loan facilities and debt instruments of Janalakshmi Financial Services because of losses made by the company as a result of lower disbursement and weak collection efficiency.
According to Kanwal, the bank has learnt its lessons and will continue to improve its risk management processes.
Jana Small Finance Bank is also looking to list by March 21, 2021.