Jana Small Finance Bank, Federal Bank shares fall up to 4% amid merger buzz

Shares of Jana Small Finance Bank and Federal Bank fell nearly 3% on Tuesday amid merger buzz. According to reports, Jana Small Finance Bank is exploring a potential merger with Federal Bank, with the deal reportedly in advanced stages.

Reacting to the news, Jana Small Finance Bank shares declined as much as 3.59% to ₹560.95 on the BSE. At the time of reporting, the small finance bank's stock was trading at ₹569, down 2.2%, with a market capitalisation of ₹6,020 crore.

Federal Bank shares also fell sharply, declining as much as 4.5% to hit a low of ₹341.80 on the BSE. Paring some of the early losses, shares of the private lender were down 3.82% at ₹344.20, with a market capitalisation of ₹85,045 crore.

Jana promoter may sell entire 16.94% stake

The report suggests that Jana's promoter is looking to sell its entire stake as part of the proposed transaction. Jana Holdings currently holds a 16.94% stake in Jana Small Finance Bank, according to the latest shareholding data available on the BSE.

The potential merger comes at a time when Jana Small Finance Bank has been seeking to transition beyond its small finance bank (SFB) status. The lender had applied to the Reserve Bank of India (RBI) in June 2025 for voluntary conversion into a universal bank.

However, the RBI returned the application in October 2025, citing non-fulfilment of the eligibility criteria prescribed for such a transition.

Under the RBI's framework, an SFB seeking to become a universal bank must meet several conditions, including a minimum net worth of ₹1,000 crore and a track record of at least five years as a scheduled bank with satisfactory performance.

The lender must also have reported net profits in the preceding two financial years, while maintaining gross non-performing assets below 3% and net NPAs below 1% over the same period.

The potential merger with Federal Bank could therefore offer Jana Small Finance Bank an alternative route to expand its banking franchise beyond the constraints associated with its SFB licence.

Earlier in May this year, TVS Venu proposed acquiring a minority stake of up to 9.9% in Jana Small Finance Bank through a combination of primary issuance of warrants and a secondary purchase. The proposed stake includes a 4.9% holding by TVS Motor Company, subject to regulatory and statutory approvals.

Jana Small Finance Bank is India's fourth-largest small finance bank, with over 17 years of lending experience and more than 12 million customers. Launched in March 2018, the bank has a national presence across 23 states and two Union Territories through 826 branches as of June 30, 2026.

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