Federal Bank on Tuesday denied reports that it is in talks to acquire a majority stake in Jana Small Finance Bank, stating that while it routinely evaluates growth opportunities, it has no deal to report.
“The bank evaluates various opportunities in the ordinary course, for growth and expansion of its business. Further, we clarify that there is no material event/ information that requires disclosure,” the private-sector lender said in a regulatory filing.
Earlier on Tuesday, a CNBC-TV18 report citing people familiar with the matter said Federal Bank and Jana SFB are in “advanced stages” of a deal for the private bank to acquire a majority stake in the small finance bank. As part of the transaction, Jana SFB’s promoter Jana Holdings Limited (JHL) is expected to sell its entire 16.94% stake, with Federal Bank likely launching an open offer following the acquisition, according to the report.
The bank issued the statement after its shares fell 4.4% intraday to a more than two-month low of ₹342.05 on the NSE before paring some losses to trade 2.7% lower at ₹348 at 2.30 pm IST. Shares of Jana Small Finance Bank were trading 1.8% lower at ₹571.10 on the NSE at 2.30 pm IST.
News of the promoter stake sale follows a rating downgrade triggered by a default on a ₹362.5-crore bond repayment. JHL and Jana Capital (JCL), both bank promoters, defaulted on non-convertible debentures (NCDs) after extending their repayment deadline from 30 June to 31 December 2026 to buy time for the stake sale.
On 30 June, India Ratings downgraded Jana Holdings’ NCDs from ‘BB’ to ‘D’ (default), citing cross-default clauses between JHL and JCL that lead the agency to evaluate them on a consolidated basis. The downgrade also reflected the credit profile of Jana SFB, whose ‘A’-rated debt remains on rating watch with “negative implications”.
In its 30 June note, India Ratings highlighted that Jana Holdings suffers from poor liquidity and severe refinancing risk, with cross-default clauses linking the rated NCDs of JCL and JHL. Because JHL lacks cash flows to service its debt and cannot expect dividend income from Jana SFB in the medium term, it must rely on stake monetisation, secondary share sales, or refinancing, it added.
TPG Asia VI India Markets Pte holds JHL’s NCDs, which were meant to be repaid either by selling a stake in its operating entity, Jana SFB, or through refinancing. As of 30 June, JHL and JCL collectively faced repayments of around ₹4,200 crore, including interest, according to the rating agency.
Additionally, JHL and JCL are in the process of merging. The entities have filed Form INC-22 and received approval from the Registrar of Companies. Form INC-22 is the regulatory filing used to officially notify the ministry of corporate affairs of a company's registered office address or a change in its operational location.
“The debt raised by both the holding companies are in the form of zero-coupon bonds, which is leading to lumpy payouts on maturity. Ind-Ra estimates the value of the holding is ₹833.53 crore, which is significantly short of the amount due for the NCD repayment,” the rating agency said.
To meet its debt obligations, JHL sold a 4.9% stake in Jana SFB to TVS Motor in April 2026 for ₹193 crore. During the post-Q1 earnings call on 16 July, managing director and CEO Ajay Kanwal told analysts that the bank had received the first tranche of ₹103 crore, with the remaining ₹80-odd crore expected soon. The TVS Group also plans to acquire an additional 5.64% stake through TVS Venu for ₹317 crore, which will bring its total holding in the bank to 9.99%.
“JHL holds a 16.9% stake in the bank from a peak of 44%. JHL and JCL will apply for de-promoterisation to Sebi and RBI post reduction of stake to less than 9.99%,” the bank had said in its Q1FY27 investor presentation, adding that the promoter has not contributed any capital for the bank since June-2022. It added that Jana Holdings has no board representation at the bank, or vice versa, and there is no cross-default linkage between their respective debts.
Federal Bank’s total advances stood at ₹2.8 trillion at the end of June, while total deposits reached ₹2.7 trillion, both up 15% year-on-year. The lender reported a net profit of ₹1,177 crore for the quarter, up from ₹862 crore in the year-ago period. Profit fell slightly from ₹1,259 crore in the previous quarter, primarily due to a one-off gain recorded in Q4FY26.
Meanwhile, Jana SFB’s total loans surged 26% year-on-year to ₹37,612 crore as of 30 June 2026, while total deposits grew 22% to ₹35,756 crore. The small finance bank posted a net profit of ₹155 crore for Q1FY27.
Driven by a passion for news and commitment to accurate and ethical reporting, Anshika Kayastha has been covering the full spectrum of BFSI—from banks and NBFCs to fintechs, insurance, payments, regulators, personal finance and money markets for the past 13 years. <br><br>Based in Mumbai, her work at Mint spans comprehensive and insightful stories on sectoral trends, regulatory and policy shifts, corporate strategies, governance, and innovation. With a particular interest in fintech, she keeps a close watch on emerging players, disruptive business models, and the evolving regulatory landscape. <br><br>Prior to joining Mint in July 2024, Anshika honed her craft at The Hindu BusinessLine and Informist Media, to deliver incisive, well-sourced reporting on the forces shaping India's financial services. She holds a degree in media and communication from Symbiosis University. <br><br>When she's not tracking the latest RBI circular or tenaciously pursuing the next story, Anshika is most at home in the mountains of Himachal Pradesh. Warm, social, and endlessly curious, she's a self-confessed credit card enthusiast, and brings that same energy to offbeat TV series, puzzles, beach vacations, and competitive game nights.
