Jana SFB's Subordinate Debt Rating Reaffirmed CARE A; Stable by CARE EDGE
Jana Small Finance Bank's subordinate debt rating was reaffirmed as CARE A with a Stable outlook by CARE EDGE Ratings on February 17, 2026. The rating reflects adequate capitalization and business growth, despite asset quality concerns in the microfinance segment impacting profitability. The bank is shifting towards secured lending.
A reaffirmation of a credit rating is a significant event for a financial institution as it impacts its borrowing costs and investor confidence. However, the rating itself (CARE A) is not the highest possible, and the announcement also details challenges like asset quality and profitability moderation, tempering the overall impact.
The credit rating was reaffirmed with a stable outlook, indicating a positive assessment of the bank's financial health and future prospects by the rating agency.
Jana Small Finance Bank Limited (JSFBL) has announced that CARE EDGE Ratings has reaffirmed the credit rating for its Subordinate Debt.
The rating assigned is CARE A with a Stable outlook, and the action taken was a reaffirmation. This rating was verified on February 18, 2026, and the original credit rating date was February 17, 2026.
The reaffirmation of the rating is supported by the bank's adequate capitalization, steady business growth, and increasing diversification of its loan portfolio. JSFBL is strategically shifting towards secured retail and micro, small, and medium enterprise (MSME) segments from unsecured microfinance lending. The proportion of microfinance loans in the advances book decreased to 27% as of December 31, 2025, from 40% as of March 31, 2024, while secured advances increased to 73% from 60%. The bank targets a further increase to approximately 80% in the medium term.
However, the ratings are constrained by a deterioration in asset quality and a moderation in profitability during FY25 and 9MFY26, primarily due to stress in the microfinance segment. This resulted in elevated credit costs and impacted earnings, with a return on total assets (ROTA) of 1.42% in FY25 and 0.61% in 9MFY26, compared to 2.30% in FY24.
The bank's CASA ratio remained relatively low at around 20% as of December 31, 2025, with a notable dependence on bulk deposits. JSFBL had applied for a transition into a Universal Bank, but the RBI returned the application, and the bank intends to resubmit it after updating its application.
JSFBL's capitalization profile remains adequate, supported by equity infusions and Tier II capital. The bank raised ₹462 crore through an IPO in February 2024 and ₹250 crore in Tier II capital in Q3FY26. As of December 31, 2025, the Capital Adequacy Ratio (CAR) was 19.17%.
The bank's advances grew by 13% year-to-date in 9MFY26, with a deliberate reduction in the unsecured microfinance portfolio. Secured loans now constitute 73% of the advances portfolio, including affordable housing loans (23%) and micro loan against property (19%).
Asset quality moderated in FY25 and 9MFY26, with slippages at 8.09% in FY25 and 7.65% (annualized) in 9MFY26. The Gross Non-Performing Assets (GNPA) ratio was 2.59% as of December 31, 2025.
Profitability is expected to improve with the normalization of credit costs and potential reduction in funding costs. The bank's deposit base has grown by 30% year-on-year, reaching ₹33,733 crore as of December 31, 2025. The liquidity profile is adequate, with an average Liquidity Coverage Ratio (LCR) of 120% and a Net Stable Funding Ratio (NSFR) of 133% for the quarter ended December 31, 2025.
The bank operates through 816 branches and focuses on retail banking, microfinance, housing loans, and MSME lending.
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