Jana SFB says remaining TVS investment awaits RBI approval; first tranche of Rs 103 crore received

Bengaluru based Jana Small Finance Bank said it has already received the first tranche of capital from TVS Motor Company as part of its proposed investment in the lender, while the remaining infusion is contingent upon regulatory approvals.

"We have received the first Rs 103 crore. We will certainly be receiving the next Rs 80 odd crore and the balance 75 per cent of the total Rs 728 crore will come over the period of 18 months,” Managing Director & CEO Ajay Kanwal told analysts during its Q1 FY27 call.

The investment forms part of TVS Motor Company's proposal to acquire a stake in Jana Small Finance Bank through the promoter entity. Kanwal said that the promoter holding company's stake has steadily declined over the past few years as the bank has raised capital from public markets and private investors rather than through its existing promoter.

"Their job of the holding company really is to invest in the bank and they right now hold 16.9 per cent stake. Their peak was at 44 per cent. They've been mostly diluted because they've not been giving the bank capital. The bank has been raising capital since June 2022 either through IPOs or other private investors," Kanwal said.

He added that the promoter has committed to sell 4.99 per cent of its stake to TVS Motor, which would further reduce its shareholding.

"The last 4.99 per cent they've committed to sell to TVS Motors, that 21-22 per cent is down to 16.9 per cent," he said.

Promoter rating downgrade

India Ratings and Research (Ind-Ra) downgraded the non-convertible debentures (NCDs) of Jana Holdings Limited and Jana Capital Limited to 'IND D' (default status). This action followed their agreement with debenture holders to extend a Rs 42 billion repayment deadline from June 30, 2026, to December 31, 2026.

Kanwal said the issue was confined to the holding companies and had no financial or operational implications for the bank.

According to him, investors in the promoter entities' Non-Convertible Debentures (NCDs) sought a six-month extension to monetise their holdings, believing Jana SFB's share price had further upside.

"India Ratings felt that since they had to downgrade the JHL and JCL rating, which fundamentally was a technical default to our minds because the NCD holders wanted more time to sell the shares and they've asked for six more months," Kanwal said.

He stated that while investors agreed to the extension, modifying the original terms of the NCD issuance resulted in what was treated as a technical default.

"Because of extension it was a change in the original conditions of NCD issues, so it became a default moment," he said and that there are "no cross default linkages", no common directors between the promoter entities and the bank, and no obligation on the bank to service the promoter's debt. He also said that CARE Ratings did not place the bank on rating watch following the action against the promoter entities.