CARE Ratings stated that the reaffirmation of the rating assigned to Jana Small Finance Bank (JSFBL) factors in the bank's adequate capitalisation, steady growth in business scale, and increasing diversification of its loan portfolio.

The credit profile is supported by the bank's ongoing strategic shift to secured retail and micro, small and medium enterprise (MSME) segments from unsecured microfinance lending, which would enhance portfolio stability in the medium term but would also exert pressure on yields going forward.

Share of microfinance loans in the advances book declined to 27% as on 31 December 2025, from 40% as on 31 March 2024, while the proportion of secured advances increased to 73% from 60%, with management targeting a further increase to 80% in the medium term.

Improvement in microfinance asset quality indicators in recent quarters supported a gradual resumption of growth in the unsecured portfolio from Q3 FY26.

However, ratings are constrained by deterioration in asset quality and moderation in profitability in FY25 and 9MFY26, primarily due to stress in the microfinance segment, which resulted in elevated credit costs and impacted earnings.

On the liability side, while the bank continued to expand its deposit base and improve its credit-to-deposit ratio, the current account savings account (CASA) ratio remained relatively low at 20% as on 31 December 2025, with a relatively high dependence on bulk deposits.

The rating remains constrained by elevated refinancing and repayment risks at the holding companies, Jana Capital and Jana Holdings.

The agency further said that factors like increasing scale of operations, while maintaining adequate capitalisation levels; improvement in deposits profile, with improvement in the CASA proportion and credit to deposit (CD) ratio on a sustained basis; and an improvement in the asset quality and profitability on a sustained basis.

However, a deterioration in asset quality leading to significant moderation in profitability parameters and a deterioration in capital adequacy parameters with capital adequacy ratio (CAR) falling below 17% on a sustained basis could lead to negative rating action.

Jana Small Finance Bank is a Bengaluru-based SFB focused on retail banking, with emphasis on microfinance, housing loans, micro housing/M-LAP, and micro and small enterprise lending. As on 31 December 2025, the bank operated through 816 branches and reported deposits of Rs 33,733 crore and advances of Rs 33,324 crore.

The scrip shed 0.70% to currently trade at Rs 391.10 on the BSE.

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