RBI Returns Jana Small Finance Bank’s Application for Universal Bank Licence

The Reserve Bank of India (RBI) has returned Jana Small Finance Bank’s (SFB) application to convert into a universal bank, saying it did not meet all the required criteria. The application, submitted in June 2025, was sent back by the regulator late Monday evening.

CEO Ajay Kanwal’s Response

Jana SFB’s Managing Director and CEO, Ajay Kanwal, clarified that this is a return, not a rejection of the bank’s application. He said the RBI did not specify the exact reasons but assured that the bank will identify and fix the issues soon. Kanwal plans to meet RBI officials later this week to understand the specific gaps before resubmitting the application.

Plans to Reapply

Kanwal confirmed that the bank intends to reapply after making necessary corrections, though no timeline has been set. He emphasized that Jana SFB will continue improving its operations to meet RBI’s expectations. The bank’s management views this as a temporary delay rather than a setback.

Impact on Bank Operations

According to Kanwal, the RBI’s decision will not affect Jana SFB’s existing operations, as it already performs most functions similar to a universal bank. The only major limitation is the inability to engage in co-lending activities. However, Kanwal added that this restriction does not hinder the bank’s business goals.

Effect on Financial Plans

While the return of the application doesn’t change Jana SFB’s business model, it does delay its plan to reduce funding costs through a universal bank license. Kanwal admitted that obtaining the license would have lowered the bank’s cost of funds, but those benefits will now be postponed.

Clarification on Parent Structure Change

Kanwal also stated that the recent restructuring of the parent company was not connected to the bank’s efforts to become a universal bank. The move was made for internal alignment and business efficiency, not as part of the licensing process.

Industry Context and Market Reaction

Earlier this year, the RBI granted an in-principle approval to AU Small Finance Bank to become a universal bank, setting an example for others. Jana SFB’s own application had created investor excitement when it was first filed, boosting its stock price. However, after the news of the application being returned, Jana SFB’s shares fell by 2.79% to ₹443.95 on the BSE by mid-morning on Tuesday.