Context:
Jana Small Finance Bank (Jana SFB) has officially applied to the Reserve Bank of India (RBI) for approval to transition into a universal bank, marking a major step in its growth strategy.
Key Highlights:
- Strategic Expansion: The move aligns with Jana SFB’s long-term vision for financial inclusion, innovation, and sustainable banking.
- Strong Performance: Since receiving its SFB license in 2017, Jana has built a robust retail and MSME-focused franchise, expanding both digital and physical reach nationwide.
- Solid Financials: The bank has demonstrated consistent growth in deposits, loans, and asset quality, positioning it well for the transition.
- Next Growth Phase: With a growing deposit base, national presence, and digital capabilities, Jana believes it is ready to operate as a full-fledged universal bank.
What Is Universal Banking?
Universal banking is a system in which banks provide a wide variety of comprehensive financial services, including those tailored to retail, commercial, and investment services.
RBI’s Licensing Guidelines Universal Banking Licences in India (2016)
The Reserve Bank of India introduced the ‘On Tap’ Licensing Policy in August 2016 for private sector universal banks. This policy allows eligible applicants to seek a banking licence at any time, enhancing dynamism and competition in the Indian banking sector.
Eligibility Criteria
- Individuals/Professionals:
- Must be Indian residents
- Minimum 10 years of senior-level experience in banking and finance
- Private Entities/Groups:
- Resident-owned and controlled
- Minimum 10 years of successful operational track record
- Large industrial houses excluded but may hold up to 10% stake
- NBFCs:
- Resident-controlled with a 10-year track record
- Must meet additional criteria prescribed by RBI
- Small Finance Banks (Conversion Eligibility):
- Net worth ≥ ₹1,000 crore
- Scheduled bank status
- 5-year satisfactory operational record
- Gross NPA ≤ 3% and Net NPA ≤ 1% for past two years
- Mandatory listing on stock exchanges
