No material event requiring disclosure: Federal Bank clarifies on Jana SFB merger report

Amid the ongoing buzz around potential merger talks with Jana Small Finance Bank, Federal Bank has clarified that there is “no material event/information” requiring disclosure under Sebi regulations. The private lender, however, did not specifically refute the reported talks, saying it “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 under Regulation 30,” the bank said in an exchange filing on Tuesday.

The clarification came after a media report titled “Federal Bank, Jana SFB deal likely in advanced stages” appeared on August 25.

The report suggested that Jana Small Finance Bank was exploring a potential merger with Federal Bank, with the deal reportedly in advanced stages. It also said Jana's promoter, Jana Holdings, could sell its entire 16.94% stake as part of the proposed transaction.

The reports triggered selling pressure in both stocks. Jana Small Finance Bank shares fell as much as 3.59% to ₹560.95 on the BSE, while Federal Bank shares declined 4.5% to an intraday low of ₹341.80.

Jana promoter looks to pare entire stake

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

The reported development comes at a crucial juncture for Jana, which has been seeking to transition from a small finance bank (SFB) into a universal bank.

Jana had applied to the Reserve Bank of India 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 RBI rules, an SFB seeking to become a universal bank must have a minimum net worth of ₹1,000 crore and a satisfactory performance track record of at least five years as a scheduled bank. It must also have reported net profits in the preceding two financial years, while maintaining gross NPAs below 3% and net NPAs below 1% over the relevant period.

A merger with a larger private lender could potentially provide Jana with an alternative route to scale its operations and expand its banking franchise, although Federal Bank has not confirmed any such transaction.

The merger speculation also comes months after TVS Venu proposed acquiring up to a 9.9% stake in Jana Small Finance Bank through a combination of primary issuance of warrants and a secondary purchase. The proposed investment included a 4.9% stake by TVS Motor Company, subject to regulatory and statutory approvals.

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