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CNBC-TV18 learns that Jana SFB promoter may exit, triggering an open offer for shareholders.
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Kochi-based Federal Bank is in talks to acquire Jana Small Finance Bank (SFB), sources told CNBC-TV18. Talks are in advanced stages, and Jana SFB's promoter is likely to sell its entire 16.9% stake to Federal Bank, triggering an open offer.
In July, CNBC-TV18 had reported, citing Jana SFB sources, that a potential merger with a peer bank was also under consideration.
In response to CNBC-TV18, Federal Bank said it evaluates various opportunities for growth and expansion. However, there is no material event or information that requires disclosure at the moment. A response from Jana SFB is awaited.
Jana SFB's promoter is struggling to repay a ₹700 crore loan taken from TPG Asia. On June 30, the lender agreed to roll it over for six months after Jana Holdings agreed to sell its stake in the small finance bank, which listed on the stock exchange in February 2024.
On July 9, Jana SFB informed the exchanges that its promoter, Jana Holdings, held a 16.9% stake in it. It divested a 4.9% stake in the first quarter of this fiscal year, and the promoter intended to further monetise the stake.
The promoter would seek reclassification to the public category once the stake falls below 9.99%, it said.
Here's why Federal Bank may want Jana SFB
Size and scale
Federal Bank's balance sheet is at ₹3.93 lakh crore, while Jana SFB's is at ₹46,812 crore.
While the former's advances and deposits are at ₹2.77 lakh crore and ₹3.2 lakh crore, the latter's are at ₹37,612 crore and ₹35,756 crore, respectively.
Federal Bank has a total of 1,650 branches while Jana SFB's branches are at 826 branches.
Assets
Jana SFB's net interest margin was at 7.5% while Federal Bank's was at 3.33% — High-yield secured book.
Jana SFB's gold loans increased 113% from last year, vehicle loans were up 78%, MSME ones were up 27%, which gives Federal Bank scale.
Jana SFB's affordable housing increased 29% from last year, granular and PSL-heavy. Its secured book is now at 72.8% as of the June quarter.
Funding arbitrage
Jana SFB's cost of funds was at 7.4% compared to Federal bank's 5.25%. A 200 basis points re-rating lever, if Jana SFB's book gets refinanced on Federal Bank's balance sheet. The Jana SFB's currant account savings account (CASA) ratio is just 19% compared to Federal Bank's 32%. The room to cross-sell Federal Bank's liability engine into Jana SFB's 4.7 million active customers, as of the first quarter this fiscal.
Geography fit
Federal Bank has a presence pan-India, but Kerala, Tamil Nadu, Karnataka account for 64% of its branches. Jana SFB is spread across 23 states and has a strong presence in Tamil Nadu, Maharashtra, Odisha, Madhya Pradesh and Karnataka.
Jana SFB adds density, where Federal Bank is thin (in Odisha, MP, Bihar, Rajasthan, Uttar Pradesh).
What's in it for Jana SFB
An exit route from a promoter debt overhang.
Re-rating potential.
Federal Bank acquisition effectively fast-tracks Jana's Unviersal Bank ambitions.
Risk
Integration drag and impact on growth momentum.
Jana SFB's asset quality is weaker — its gross non-performing assets (GNPA) was at 2.24% while Federal Bank's is at 1.52%. The unsecured GNPA done at 6.7%.
Key things to watch
Deal terms
Swap ratio
Open-offer price
Stock reaction
Shares of Federal Bank were trading 3.3% lower at ₹345.9 apiece at 1.53 pm on Tuesday, while Jana SFB's were down 2.05% at ₹569.6 apiece.
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First Published:
Aug 25, 2026 2:30 PM
IST
