Federal Bank on Tuesday denied reports that it is in advanced discussions to acquire a majority stake in Jana Small Finance Bank (Jana SFB), sending its shares lower by as much as 4.4 percent during the day.
Federal Bank shares fell to a more than two-month low of ₹342.05 on the NSE following reports of the proposed transaction. The stock later recovered some ground and was trading 2.7 percent lower at ₹348 around 2.30 pm.
Jana SFB shares were also down 1.8 percent at ₹571.10.
The bank said in a regulatory filing that it regularly evaluates opportunities to expand its business, but there was no material development requiring disclosure.
“the bank evaluates various opportunities in the ordinary course, for growth and expansion of its business,” Federal Bank said, adding that there was “no material event/information” requiring disclosure.
The clarification came after a CNBC-TV18 report, citing sources, said Federal Bank and Jana SFB were in the “advanced stages” of discussions for a deal under which Federal Bank would acquire a majority stake in the small finance bank.
According to the report, Jana Holdings Ltd (JHL), Jana SFB’s promoter, could sell its entire 16.94 percent stake. Federal Bank could subsequently launch an open offer for additional shares.
The reported stake sale comes against the backdrop of financial pressure on Jana SFB’s promoter entities, Jana Holdings and Jana Capital (JCL).
India Ratings on June 30 downgraded Jana Holdings’ non-convertible debentures from ‘BB’ to ‘D’ after a default on a ₹362.5-crore repayment. The rating agency cited cross-default provisions linking the debts of Jana Holdings and Jana Capital.
The promoter entities had extended the repayment deadline on their NCDs from June 30 to December 31, 2026, to provide more time for a stake sale.
India Ratings has also kept Jana SFB’s ‘A’-rated debt on rating watch with negative implications.
According to India Ratings, Jana Holdings and Jana Capital together faced repayments of around ₹4,200 crore, including interest, as of June 30.
The rating agency said Jana Holdings had poor liquidity and faced significant refinancing risks. Since the holding company does not have sufficient cash flows to service its debt and cannot rely on dividends from Jana SFB in the medium term, it would have to depend on stake monetisation, secondary share sales or refinancing.