Jana Small Finance Bank Ltd IPO

Focus on accelerating its secured loans book with the purpose of meeting customers` needs and diversifying its lending book.

Reshape its unsecured loans (Microfinance Loans) business.

Improve our risk profile.

Enhance the growth of Retail Deposits.

Alliances with third parties from banking to broking.

Deepen customer relationships.

Continued focus on digitized operations.

Digitalised bank and majority services are available in digital form to customers.

Integrated risk and governance framework.

Professional and experienced management and Board.

Customer-centric organization with more than 16 years` experience in serving underbanked and underserved customer.

Pan-India presence with strong brand recognition.

Fast growing Retail Deposits base and diversified deposit franchise.

Proven execution ability.

The bank is subject to inspections by various regulatory authorities, such as the RBI, PFRDA, IRDA and National Pension System Trust. Non-compliance with the observations of such regulators could adversely affect its business, financial condition, results of operations and cash flows.

The bank is subject to stringent regulatory requirements and prudential norms. In addition, some of these regulatory requirements and prudential norms are more onerous for Small Finance Banks compared to other banks. The bank has not been able to comply with certain provisions of the SFB Licensing Guidelines and the RBI Final Approval. As a result, the RBI may take regulatory action against it, which could include imposition of monetary penalties, revocation of the RBI Final Approval or such other penal actions and restrictions deemed fit by the RBI, the imposition of any of which could have a material adverse effect on its business, financial condition, results of operations and cash flows.

Its Bank is subject to restrictions relating to the Equity Shares as per the RBI In-Principle Approval, RBI Final Approval, SFB Licensing Guidelines and SFB Operating Guidelines.

There have been irregularities in certain regulatory filings made by it with the RoC under applicable law and delays in submitting regulatory filings with the RBI. Further, certain of its statutory and regulatory records are untraceable. The bank cannot assure you that no legal proceedings or regulatory actions will be initiated against its Bank in the future in relation to such missing corporate records or irregular filings.

Its non-convertible debentures are listed on the BSE and the bank is subject to rules and regulations with respect to such listed non-convertible debentures. If its fail to comply with such rules and regulations, its may be subject to certain penal actions, which may have an adverse effect on its business, results of operations, financial condition and cash flows.

Its may be unable to maintain or renew its statutory and regulatory permits, licences and approvals required to operate its business, which may adversely affect its business, financial condition, results of operation and cash flows.

The RBI is required to approve candidates proposed to be appointed as chairman, managing director and executive director. Additionally, the RBI has the power and the authority to remove any employee or managerial person under certain circumstances.

Any non-compliance with mandatory AML, KYC and CFT laws and regulations could expose it to liability and harm its business and reputation.

Due to the non-updating of their Aadhaar numbers by certain of its employees with the Pension Fund Regulatory and Development Authority ("PFRDA"), the bank was unable to deposit the provident fund payments for such employees with the PFRDA. All such amounts have been remitted to an escrow account. Its deposit the provident fund payments for such employees with the PFRDA once its receive their updated Aadhaar numbers. Its subject to an interest levy payable on the amounts that are required to be deposited with the PFRDA until the date such amounts are deposited with the PFRDA.

A high Illiquidity Ratio indicates that a bank holds a low amount of liquid assets, which affects its ability to pay its debt obligations and short-term liabilities. If its unable to decrease its Illiquidity Ratio, it could have an adverse effect on its business, financial condition, results of operations and cash flows.

A low Core Deposit Ratio means that a bank has less assets that are backed by deposits, and indicates that the bank has low liquidity. If its unable to increase its Core Deposits Ratio, it could have an adverse effect on its business, financial condition, results of operations and cash flows.

A high Illiquid Assets Ratio may affect a bank`s ability to pay its liabilities. If its unable to decrease its Illiquid Assets Ratio, it could have an adverse effect on its business, financial condition, results of operations and cash flows.

The bank has made new loans to microfinance loan borrowers who had NPAs ("Microfinance NPA Borrowers"), with earlier NPAs being netted off with the proceeds of new loans, which poses a risk of further deteriorating asset quality and increasing credit risk.

If the bank is unable to control the level of its non-performing assets ("NPAs") or if its unable to maintain adequate provisioning coverage or if there is any change in regulation-mandated provisioning requirements, its financial condition and results of operations could be adversely affected.

Its unsecured loans have a higher credit risk than the bank secured loans because the vast majority of those loans are Microfinance Loans and customers availing Microfinance Loans have limited sources of income (annual household income of up to Rs. 300,000) and savings and, as such, generally do not have a high level of financial resilience and unsecured loans are not supported by collateral. If its unable to recover such advances in a timely manner or at all, its financial condition, results of operations and cash flows would be adversely affected.

The bank is subject to interest rate risk, the occurrence of which would have an adverse effect on its Net Interest Margin, which would adversely affect its Net Interest Income and, in turn, its results of operations and cash flows. In addition, an increase in interest rates would result in a decrease in the value of its fixed income securities, which could adversely affect its financial condition, results of operations and cash flows.

The bank is exposed to operational risks, including employee negligence, petty theft, burglary and embezzlement and fraud by employees, agents, customers or third parties, which could harm its reputation, business, financial condition, results of operations and cash flows.

The bank is required to maintain a minimum cash reserve ratio ("CRR") and statutory liquidity ratio ("SLR"). In the event that the CRR or SLR requirements applicable to the bank is increased in the future, its ability to make advances would be correspondingly reduced, which may adversely affect its business, financial condition, results of operations and cash flows.

The bank is required to maintain a minimum CRAR. As its continue to grow its loan portfolio and asset base, its may be required to raise additional capital in order to continue to meet applicable CRARs with respect to its business. However, its cannot assure you that the bank will be able to raise adequate additional capital in the future on terms favourable to it, or at all, which may adversely affect the growth of its business.

The bank is subject to exposure ceilings.

At least 50% of its net advances is required to constitute advances of up to Rs. 2.50 million, which requirement is only applicable to Small Finance Banks.

The priority sector lending ("PSL") requirements applicable to a Small Finance Bank are significantly higher than the PSL limits applicable to other Scheduled Commercial Banks, which could subject it to higher delinquency rates and may limit its funding from securitizations and assignments to comply with such requirements. In case of any shortfall by its in meeting the PSL requirements, the bank would subsequently be required to place the allocated amount by the RBI in an account with the NABARD under the Rural Infrastructure Development Fund Scheme, or with other institutions specified by the RBI, which may earn lower rates of interest, compared to other interestbearing securities.

If the bank is unable to secure funding on acceptable terms and at competitive rates when needed, it could have a material adverse effect on its business, financial condition, results of operations and cash flows.

If its borrowers who have availed secured loans default, there may be delays and difficulties in enforcing the sale of collateral and its may be unable to recover the expected value of the collateral, which could have a material adverse effect on its financial condition results of operations and cash flow.

Many of its customers does not have any credit history supported by tax returns, financial statements, credit card statements, statements of previous loan exposures or other related documents, which makes it more difficult for it to assess the credit risk of loans to such customers. Difficulties in assessing credit risks associated with its day-today lending operations may lead to an increase in the level of its NPAs, which could have a material adverse effect on its business, financial condition, results of operations and cash flows.

The bank has not complied with certain covenants under its financing agreements in the past. Any non-compliance with covenants under its financing agreements that are not waived may be declared to be an event of default and lead to, among other things, acceleration of repayment schedules, securitization of assets charged and suspension of further drawdowns, which could adversely affect its business, financial condition, results of operations and cash flows.

If its CASA Ratio decreases it could increase the bank Cost of Funds, which could adversely affect its ability to compete for market share unless its decrease the bank Net Interest Margin.

The bank incur significant operating expenses and any increase in these operating expenses without a corresponding increase in its Operating Income will adversely affect its financial condition, results of operations and cash flows.

Its borrowers may transfer loan balances to other banks or financial institutions, resulting in a loss of expected interest income expected from such loans.

Advances transferred via IBPCs, assigned advances and NPAs sold to ARCs are all off balance sheet advances. Its off balance sheet advances expose it to certain risks, including not having sufficient liquidity at the time of redemption of an IBPC, the assumption of the IBPC assets on its balance sheet upon redemption will adversely affect its CRAR and the risk of loss of income from those advances if an agreement pursuant to which its act as a collection agent is terminated.

The bank cannot assure you that any new products and services its introduce will be profitable, which may adversely affect its business, financial condition, results of operations and cash flows.

The bank face asset liability mismatches, which could affect its liquidity and consequently may adversely affect its financial condition, results of operations and cash flows.

The bank had negative cash flows from operating activities for the half years ended September 30, 2022 and September 30, 2023 and for Fiscal 2023 and its may experience negative cash flows from operating activities in the future.

If the bank was to incur a serious uninsured loss or a loss that significantly exceeds the limits of its insurance policies, it could have an adverse effect on its financial condition, results of operations and cash flows.

Weaknesses, disruption or failures in IT systems could adversely affect its business. In addition. Its may face cyber threats attempting to exploit the bank network to disrupt services to customers and/or theft of sensitive internal data or customer information, which may cause damage to its reputation and adversely affect its financial condition, results of operations and cash flows.

If the bank fail to adapt to technological advancements in the financial services sector, it could affect the performance and features of its products and services and reduce the bank appeal to customers.

Customers located in the states of Tamil Nadu, Karnataka and Maharashtra represent a significant portion of its advances and deposits and customers in West Bengal represent a significant portion of its deposits. Any adverse developments in these states, such as an economic downturn, political unrest, natural disasters or epidemics, could adversely affect its business, financial condition and results of operations.

If its risk management policies are ineffective, it could adversely affect its business, financial condition, results of operations and cash flows.

The bank is dependent on its Key Management Personnel, Senior Management Personnel and other key personnel and the loss of, or its inability to retain or attract, such persons could adversely affect its business, financial condition, results of operations and cash flows.

The bank could be subject to volatility in results from its treasury segment, which could have an adverse effect on its financial condition, results of operations and cash flows.

Its business correspondent entities act for it on a non-exclusive basis, except at its business correspondent operated banking outlets, where they act on an exclusive basis. If any of its business correspondents promote its competitors` loans over its loans or the agreements between it and them are terminated or not renewed, it would adversely affect its business, financial condition, results of operations and cash flows.

Its lease or licence all of the bank`s business premises and any failure to renew such leases or licences or their renewal on terms unfavourable to it may adversely affect its business, financial condition and results of operations and cash flows.

Any non-compliance with law or unsatisfactory service by the third-party service providers engaged by it for certain services could have an adverse impact on its business, results of operations and cash flows.

The bank is involved in certain legal proceedings, any adverse developments related to which could adversely affect its reputation, business, financial condition, results of operations and cash flows.

The bank is in dispute with Bank of Maharashtra regarding a pool of receivables amounting to Rs. 1,000 million the bank has assigned to it, along with the associated interest payable.

Materialisation of contingent liabilities not provided for as per AS 29-Provisions, Contingent Liabilities and Contingent Assets could adversely affect its financial condition, results of operations and cash flows.

If the bank fail to successfully enforce its intellectual property rights or the agreement pursuant to which its have the non-exclusive license to use the trademarks " " and "JANA" is terminated, its business, results of operations and cash flows would be adversely affected.

Some of its lease/ license agreements have not been registered as required under the Registration Act, 1908.

The bank face intense competition in all its principal products and services and if the bank is unable to compete effectively it would adversely affect its business, financial condition, results of operations and cash flows.

Deterioration in the performance of any industry sector in which the bank have significant exposure may adversely affect its financial condition, results of operations and cash flows.

The Indian loan against property ("LAP") market faces delinquency and collateral challenges that could impact its stability and growth potential. If its unable to manage the risks involved in Micro LAP and gross affordable housing loans, it could have an adverse effect on its financial condition, results of operation and cash flows.

COVID-19 has had and could continue to have an adverse effect on its business, financial condition, results of operations and cash flows.