Jana Small Finance Bank shares rise 7% after RBI's AD-I Forex License Approval

Jana Small Finance Bank shares witnessed a sharp rise of nearly 7% in Friday’s trading session after the Reserve Bank of India (RBI) granted the bank an Authorized Dealer Category-I (AD-I) license, allowing it to conduct foreign exchange transactions.

Following the announcement, Jana Small Finance Bank Ltd share price surged 6.94%, reaching an intraday high of ₹467.95 per share on the National Stock Exchange (NSE). The development reflects strong investor confidence in the bank’s ability to expand its operations into forex services, potentially diversifying its revenue streams and enhancing its growth prospects.

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RBI’s Approval and Its Impact

In a regulatory filing, the bank stated, "The Reserve Bank of India, through its letter dated March 6, 2025, has granted a License to act as an Authorized Dealer Category-I (AD-I) under Section 10 of FEMA, 1999, allowing the bank to engage in foreign exchange transactions."

The AD-I license is significant as it permits banks to deal in all types of foreign exchange transactions, including remittances, trade-related forex services, and foreign currency borrowing. This enables Jana Small Finance Bank to cater to a broader customer base, including businesses and individuals involved in international trade and finance.

Financial Performance and Growth Prospects

Despite this positive regulatory approval, the bank’s financial performance in the third quarter of the fiscal year 2024-25 showed a decline in net profit. Jana Small Finance Bank reported a 17.8% year-on-year drop in net profit, falling to ₹110.6 crore for the quarter ending December 31, 2024, from ₹134.6 crore in the same period the previous year.

However, the bank’s net interest income (NII)—the difference between interest earned and interest paid—grew by 8.1%, reaching ₹593 crore compared to ₹548.5 crore in Q3 FY24. This increase suggests that the bank continues to expand its lending business, which remains a crucial source of revenue.

Furthermore, the bank’s assets under management (AUM) grew by 19% year-on-year, standing at ₹27,984 crore as of December 2024. Notably, 68% of these assets are secured, indicating a relatively lower credit risk in its loan portfolio.

Market Outlook and Future Expectations

The AD-I license is expected to provide Jana Small Finance Bank with a competitive edge, allowing it to tap into India’s growing forex market. As businesses and individuals increasingly engage in cross-border transactions, the bank’s ability to facilitate foreign exchange dealings could boost its fee-based income and overall profitability.

With steady growth in its loan book and asset base, Jana Small Finance Bank is positioning itself as a strong player in the financial sector. Investors will closely watch the bank’s performance in the coming quarters to assess how effectively it leverages its newly acquired forex capabilities.