Jana Small Finance Bank files DRHP to raise Rs 700 crore via fresh share issue

Jana Small Finance Bank (SFB) on Thursday filed a draft red herring prospectus (DRHP) for a fresh issue of shares worth Rs 700 crore, accompanied by a sale of shares by existing investors.

The investors looking to sell shares through the offer for sale (OFS) route include Alpha TC Holdings, Bajaj Allianz General Insurance Company, ICICI Prudential Life Insurance Company and Vallabh Bhanshali. “We intend to utilise the Net Proceeds to augment our Bank’s Tier -I capital base to meet our Bank’s future capital requirements, which are expected to arise out of growth in our Bank’s assets, primarily our Bank’s advances and investment portfolio, and to ensure compliance with applicable RBI regulations and guidelines,” the SFB said in the DRHP.

Jana SFB’s deposits grew at an annual rate of 129.9% and stood at Rs 9,650 crore on March 31, 2020, up from Rs 4,200 crore in the previous year. It claimed to have witnessed the highest disbursement growth rate and assets under management (AUM) growth in FY20 among SFBs. “The asset book of Jana SFB continued to diversify with 25.0% of the book being secured in FY20 as compared to 15.0% in FY19,” the bank said. Its total secured advances rose to Rs 2,860 crore in FY20 from Rs 1,000 crore in FY19.

Its capital adequacy ratio stood at 19.3%, with the tier-I ratio at 13.1%, in FY20.

The bank’s net interest margin (NIM) stood at 9.36% at the end of September 2020, down from 9.81% as on March 31, 2020. As on September 30, 2020, Jana SFB’s gross non-performing assets (NPAs) stood at 2.72%, down from from 42.21% as on March 31, 2018.

The bank attributed the reduction in bad loans to a focus on increasing secured advances to reduce the risk of loan losses and growth in its agricultural and allied loans advances within the unsecured advances.

As on September 30, 2020, of a total of Rs 10,419 crore of gross advances outstanding, Rs 44.37 crore, or 0.43%, were restructured under the Reserve Bank of India’s (RBI) MSME scheme. The actual write-offs for the six months ended September 30, 2020, stood at Rs 12.34 crore, while that for the year ended March 31, 2020 stood at Rs 49.85 crore.