CARE EDGE Ratings has reaffirmed the ‘CARE A; Stable’ rating assigned to Jana Small Finance Bank Limited’s (JSFBL) Lower Tier II Subordinate Debt. The affirmation reflects the bank’s adequate capitalisation, steady business growth, and ongoing diversification into secured retail and MSME lending segments. While profitability moderated in 9MFY26 due to asset stress, the outlook remains Stable, anticipating maintenance of capital adequacy and scale-up in advances.
Credit Rating Reaffirmed for Jana SFB
Jana Small Finance Bank Limited (JSFBL) has received confirmation of its credit rating from CARE EDGE Ratings for its outstanding Subordinate Debt, specifically the Bonds-Lower Tier II (ISIN: INE953L08329) amounting to ₹75.00 crore. The rating has been reaffirmed as CARE A; Stable, following a verification date of February 18, 2026.
Key Drivers Supporting the Rating
The reaffirmation is underpinned by several factors contributing to JSFBL’s credit profile:
- Adequate Capitalisation: The bank maintains sufficient capital, evidenced by a Capital Adequacy Ratio (CAR) of 19.17% as of December 31, 2025, supported by recent Tier II capital raises.
- Business Diversification: There is a strategic shift from unsecured microfinance lending to secured retail segments. The share of secured advances increased to 73% (from 60% as of March 31, 2024), aligning with management’s medium-term target of ~80%.
- Scale and Growth: Advances grew strongly post-COVID, though growth moderated to 13% year-to-date in 9MFY26 due to the deliberate reduction in the unsecured portfolio.
Areas of Constraint and Performance Summary
The rating is constrained by recent performance metrics:
- Profitability Moderation: Profit after tax (PAT) stood at ₹187 crore in 9M FY26, down from ₹501 crore in FY25, resulting in Return on Total Assets (ROTA) dropping to 0.61%. This was driven by elevated credit costs and Net Interest Margin (NIM) compression.
- Asset Quality Stress: Elevated slippages in FY25 and 9MFY26, particularly in the microfinance segment, necessitated significant write-offs, although GNPA remained below 3%.
- Liability Profile: The Current Account Savings Account (CASA) ratio remained low at approximately 20% as of December 31, 2025, indicating continued reliance on bulk deposits.
Outlook and Future Expectations
The Stable Outlook reflects expectations that JSFBL will successfully manage profitable scale-up in advances and deposits while keeping asset quality under control. Future improvements in profitability are anticipated contingent upon the normalisation of credit costs. The bank is actively pursuing resubmission of its application to transition into a Universal Bank.
Source: BSE
