Why This Recently Listed Small Cap Stock Surged 20% To Hit The Upper Circuit Today

Jana Small Finance Bank’s were surging on Tuesday to hit the upper circuit limit, buoyed by investor optimism over the bank’s intention to apply for a universal bank license by June 2025.

What Happened: Jana Small Finance Bank’s announcement follows closely on the heels of a recent circular from the Reserve Bank of India (RBI) outlining the voluntary transition process for Small Finance Banks to Universal Banks, which introduced additional criteria for interested banks.

Ajay Kanwal, managing director and CEO of Jana Small Finance Bank, highlighted that the only parameter where the bank fell short was non-performing assets (NPA), Moneycontrol reported. He told the publication that the bank’s net NPA ratio has been below 1% for one financial year, and it is on track to meet the criteria by the end of the next financial year, intending to submit a formal application by May-June 2025.

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As per RBI guidelines, Small Finance Banks seeking universal bank status must maintain a net non-performing assets ratio of 1% or less over the last two financial years, among other criteria such as compound annual growth rate, positive net profit, and gross NPA maintenance.

Jana Small Finance Bank’s latest financial data indicates that its standalone net worth stands at ₹3,577 crore, exceeding the RBI’s stipulated requirement. Regarding asset quality, the bank’s gross non-performing assets (GNPA) were 2% in FY24, accompanied by net NPA figures of 0.5% for the same period.

Price Action: Jana Small Finance Bank’s share price shot up 20% to ₹598.95 in afternoon trade on Tuesday. Since its listing in February, the stock has given returns of over 62% to investors.

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