KOLKATA: Jana Small Finance Bank has initiated a process to merge its non-operative financial holding company into core investment company to create a leaner structure even as the bank is awaiting Reserve Bank of India's decision on its universal bank licence application.
Jana Capital is the core investment company, which promoted Jana Holdings as the non-operative holding company to hold the promoter stake in the small finance bank. Jana Capital holds 100% in Jana Holdings, which in turn, holds 21.88% in the bank.
The decision to merge the two holding companies into one is not related to Jana's universal banking aspirations while this would only help improving efficiency through a leaner structure, managing director and chief executive officer Ajay Kanwal said.
Jana Capital would continue to be operational and will hold shares in the bank.
"The three-tier structure of CIC, NOFHC and operating entity was created as per the RBI regulations when we had applied for a small finance bank licence. This requirement has since been removed by the RBI in the licensing requirements," Kanwal told ET.
Earlier, before the bank's initial public offer, the bank board had aborted similar plans on commercial grounds.
The decision to make a fresh attempt was taken as the bank management has no plan to get into businesses like insurance or mutual fund product manufacturing, another person familiar with the matter said.
To put things into perspective, Bandhan Financial Services, the core investment company and the promoter of Bandhan Financial Holdings and Bandhan Bank, floated separate insurance and mutual fund ventures.
But Jana management has no such plans even after its possible upgradation as a universal bank, the person said. "The bank offers insurance covers to customers as third-party products. There is no need to get into product manufacturing," he said.
Jana applied for the voluntary transformation on June 9.
"That is a very important step for us as we broad base both our product and customer base," Kanwal said last month in a post-earning investor call.
"It (universal banking licence) should certainly improve the velocity of CASA and deposit into the bank. It should very immediately change the cost of deposit that we get as a bank," he said.
The Reserve Bank of India has recently given an in-principle universal banking licence to AU Small Finance Bank, making it the first small finance bank to get a ticket to upgrade itself. Ujjivan Small Finance Bank is another entity which also applied for the licence.
Jana Capital is the core investment company, which promoted Jana Holdings as the non-operative holding company to hold the promoter stake in the small finance bank. Jana Capital holds 100% in Jana Holdings, which in turn, holds 21.88% in the bank.
The decision to merge the two holding companies into one is not related to Jana's universal banking aspirations while this would only help improving efficiency through a leaner structure, managing director and chief executive officer Ajay Kanwal said.
Jana Capital would continue to be operational and will hold shares in the bank.
"The three-tier structure of CIC, NOFHC and operating entity was created as per the RBI regulations when we had applied for a small finance bank licence. This requirement has since been removed by the RBI in the licensing requirements," Kanwal told ET.
Earlier, before the bank's initial public offer, the bank board had aborted similar plans on commercial grounds.
The decision to make a fresh attempt was taken as the bank management has no plan to get into businesses like insurance or mutual fund product manufacturing, another person familiar with the matter said.
To put things into perspective, Bandhan Financial Services, the core investment company and the promoter of Bandhan Financial Holdings and Bandhan Bank, floated separate insurance and mutual fund ventures.
But Jana management has no such plans even after its possible upgradation as a universal bank, the person said. "The bank offers insurance covers to customers as third-party products. There is no need to get into product manufacturing," he said.
Jana applied for the voluntary transformation on June 9.
"That is a very important step for us as we broad base both our product and customer base," Kanwal said last month in a post-earning investor call.
"It (universal banking licence) should certainly improve the velocity of CASA and deposit into the bank. It should very immediately change the cost of deposit that we get as a bank," he said.
The Reserve Bank of India has recently given an in-principle universal banking licence to AU Small Finance Bank, making it the first small finance bank to get a ticket to upgrade itself. Ujjivan Small Finance Bank is another entity which also applied for the licence.
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