MICROCAPITAL BRIEF: Microfinance Institution Janalakshmi of India Converts to Jana Small Finance Bank

Jana Small Finance Bank (SFB), the successor to Indian microlender Janalakshmi Financial Services, recently announced the launch of its operations. Jana obtained its SFB license from the Reserve Bank of India (RBI) in April 2017, but the launch was delayed by losses attributed to India’s 2016 demonetization. These losses totaled INR 25 billion (USD 385 million) for the year ending March 2018. Jana CEO Ajay Kanwal reportedly said, “because of the delayed launch, the bank has lost many customers.” However, he added, “I don’t see a challenge on how we will grow…because the market still is underbanked.”

Janalakshmi was formed in 2006 and obtained a license from RBI to operate as a non-banking financial company-microfinance institution (NBFC-MFI) in 2008. Because of the organization’s conversion from an NBFC-MFI to an SFB, Jana now may accept deposits, access government-sponsored deposit insurance and issue checks. In addition to loans and deposits, Jana offers payment card services to individuals and small and medium-sized enterprises (SMEs) in India’s rural areas. As of March 2017, the organization reported total assets of INR 151 billion (USD 2.3 billion) and outstanding loans of INR 47 billion (USD 735 million). Jana serves approximately 4.5 million customers via 600 locations in 19 Indian states.

Established in 1935, RBI supervises commercial banks, NBFCs and other financial institutions. It also consolidates accounting standards, resolves cases of banking fraud, monitors non-performing assets and supervises the rating model for the banking sector.

By Nicholas Galimberti, Research Associate

Sources and Additional Resources

LiveMint article
https://www.livemint.com/Industry/uUiqrEPO9N8LhZ1i53FuPM/Jana-Small-Finance-Bank-launches-commercial-operations.html

Jana background
https://www.janabank.com/index.php/about-us/who-we-are/milestone

JFS annual report
https://www.janabank.com/images/PDF/jfs-16-17.pdf

CRISIL Rating for JFS
http://www.catalysttrustee.com/wp-content/uploads/2017/12/JFS-Rating-Rationale.pdf

RBI NBFC-MFI background
https://www.rbi.org.in/scripts/FS_FAQs.aspx?Id=92&fn=14

RBI financials
https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1211

MicroCapital Brief; August 24, 2017; Reserve Bank of India Releases “Compendium of Guidelines on Financial Inclusion and Development” in Support of Small Finance Banks’ Launch
https://www.microcapital.org/microcapital-brief-reserve-bank-india-releases-compendium-guidelines-financial-inclusion-development-support-small-finance-banks-launch/

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