Repayment rates have improved sharply: Jana Bank

BENGALURU: Jana Small Finance Bank, the erstwhile Janalakshmi Financial Services, on Wednesday announced the formal commercial launch of banking operations.
The bank had a soft launch a few months ago. It has opened 157 branches in 19 states. This is in addition to the 400 odd branches that it had in its microfinance institution network as Janalakshmi Financial Services. These branches will now double up as bank branches.
Jana, which has 45 lakh customers and a loan book of Rs 7,600 crore, is planning to hire another 1,000 employees, which will take the total to over 15,000.
Small finance banks are part of the government’s financial inclusion objective and are expected to serve small business units, small and marginal farmers, and unorganized sector entities. Ramesh Ramanathan, non-executive chairman of Jana Small Finance Bank, said over 90% of the formal banking industry’s lending of $1.5 trillion goes to the top 5%-10% of India. “What do you think an average family income of Rs 5 lakh per year, what percentile of India does it represent? You would be shocked to know it is the top 2%. A family earning Rs 5 lakh will be in the 98 percentile of India. If you’re servicing somebody with Rs 30,000 income per month, you’re talking about the 97th percentile. That’s the size of our challenge,” he said.
The former deputy governor of RBI, R Gandhi, said small finance banks could see stronger growth in the coming years with differentiated product offerings.
Ajay Kanwal, CEO of Jana Small Finance Bank, said the bank is positioning itself to grow its user base in rural and unbanked areas with a diverse loan portfolio. “We see sound demand for affordable housing loans and two-wheeler loans. We will launch affordable home loans beginning next month,” he said.
Kanwal said the new loans are showing repayment rates of more than 99%. The older loans which were given before demonetisation are being recovered slowly. “We are concentrating majorly on their collections," he said. The group went through a tough time in the period following demonetisation, when many borrowers found it difficult to repay loans.
Kanwal said the bank has in the recent past raised Rs 1,600 crore from a clutch of investors and would be adding another Rs 300 crore to its capital base soon. The company has unveiled an inaugural interest rate offer of 8.5% (9.1% for senior citizens) for 366-day fixed deposits.