Janalakshmi Fin. Director Discussions

Your Directors are pleased to present the 18th Annual Report of the Company and the 7th Annual Report of Jana Small Finance Bank Limited along with the Audited standalone financial statements for the financial year ended 31st March 2024.

FINANCIAL SUMMARY:

[Rs. in 000s]

Particulars	2023-24	2022-23
Advances	23,11,12,739	17,75,95,554
Deposits and Barrowings	27,78,27,079	22,61,14,758
Total Income	4,68,40,563	3,69,98,750
Interest Expended	1,88,59,047	1,41,49,901
Operating Expenses	1,60,48,397	1,28,45,104
Provisions and contingencies	52,37,716	74,44,032
Profit for the year	66,95,403	25,59,713
Add: surplus brought forward from previous year	-	-
Less: loss brought forward from previous year	(3,90,78,736)	(4,08,30,298)
Amount available for appropriation	(3,23,83,334)	(3,82,70,585)
Appropriations:
Dividend & Dividend Tax	-	-
Transfer to Statutory Reserve under section 17 of the Banking Regulation Act and other reserves	18,73,851	8,08,151
Surplus carried to Balance Sheet	(3,42,57,185)	(3,90,78,736)

OVERVIEW OF OPERATIONS:

The net Interest Income has grown from 1,660.0 crores in FY23 to 2,127.1 crores in FY24 an increase of 28.1%. The Profit Before Tax (PBT) has doubled from 256.0 crores in FY 2023 to 514.4 crores for FY24. Profit after tax (PAT) stood at 670 crores in FY24 as compared to 256 crores in FY23, registering a growth of 162%. The PAT for FY24 has reckoned 155 crores of Deferred Tax Asset in Q4-FY24.

The Asset Under Management witnessed a jump of 24.9% from 19,808 crores in FY23 to 24,746 crores for FY24. The secured portfolio grew by 33% year-on-year basis and is now near to 60% of the total Asset Under Management. Our deposits of your Bank grew by 38% during the year and stood at 22,571 crores. Retail Deposits including CASA constitute 61.0% of the overall deposits of the Bank.

The Capital Adequacy Ratio ("CRAR") was 20.3% as at March 31, 2024 (March 31, 2023: 15.6%) well above the statutory minimum requirement of 15%.

Cost to Income ratio for FY24 was 57.4% as compared to 56.2% for FY23. The Return on Assets improved significantly during the year and was at 2.37% during FY 2024 as compared to 1.13% in FY23. The increase in Return on Asset was primarily due to business growth coupled with improved asset quality and Deferred Tax Assets ("DTA"). The number of banking outlets increased to 808 in March 2024 from 754 in March, 2023.

The asset quality of your Bank has significantly improved, with GNPA at 2.0% (vs. 3.6% in FY23) and NNPA at 0.5% (vs. 2.5% in FY23).

Please note IBPC and Securitization book is included for the purpose of GNPA/NNPA, ROA, ROE and Networth is after considering DTA of Rs. 155 crores for FY24.

DIVIDEND AND TRANSFER TO RESERVES:

In compliance with Section 15 of the Banking Regulation Act, 1949 your Board of Directors have not recommended any dividend for the financial year 2023-24.

Further, the Board has recommended transfer of Rs. 187.39 crores from the profit/surplus to reserves, as against Rs. 80.82 crores transferred during the previous year.

SHARE CAPITAL:

The authorised capital of the Bank as on 31st March 2024 is Rs. 5,85,00,00,000 (Rupees five hundred and eighty five crores), comprising 13,50,00,000 (Thirteen Crore Fifty Lakhs) equity shares of Rs. 10/- (Rupees Ten) each and 45,00,00,000 (Forty Five Crore) preference shares of Rs. 10/- (Rupees Ten) each. The paid up capital of the Bank stood at Rs. 10,45,90,275 equity shares of Rs. 10/- (Rupees Ten) each.

During the year Bank raised capital by way of private placement, ESOP allotment, rights issue and Initial Public Offerings. Details of capital augmentation is as under:

Particulars	No. of equity shares
Equity shares as at the beginning of the year	5,49,78,703
(+) stock option exercised	1,14,071
(+) rights issue of equity shares issued during the year	1,48,50,632
(+) preferential issue of equity shares issued during the year	24,39,607
(+) conversion of CCPS into equity shares	2,10,47,842
(+) Initial Public Offer of equity shares issued during the year	1,11,59,420
Equity shares outstanding as at the end of the year	10,45,90,275

DEBT INSTRUMENTS:

As at 31st March 2024, details of rated, listed and unlisted, unsecured, subordinated, redeemable lower Tier II bonds in the form of Non-Convertible Debentures are as under:

Sr No	ISIN	Series	Listed/ unlisted	No of Units	Face Value	Total Value (in Rs.)	Issue Date	Maturity Date	Current Interest Rate
1	INE953L08329	023	Listed	3,300	2,27,272.73	75,00,00,000	22-12-2015	07-07-2027	13.80%
2	INE953L08295	048A	Listed	1,750	10,00,000	1,75,00,00,000	29-06-2019	29-06-2025	14.50%
3	INE953L08303	048B	Listed	500	10,00,000	50,00,00,000	10-07-2019	10-07-2025	13.15%
4	INE953L08311	049A	Un-listed	500	10,00,000	50,00,00,000	31-08-2021	30-11-2026	13.50%
	Total			6,050		3,50,00,00,000

CREDIT RATING:

The ratings assigned by ICRA/ and India Ratings & Research Private Limited for various instruments are:

Instrument	Rating	Rating Agency
NCD	[ICRA]A- (Stable)	ICRA Limited
NCD	IND A- / Stable	Indian Ratings & Research Private Limited
Fixed deposits	IND A- / Stable	Indian Ratings & Research Private Limited

BOARD OF DIRECTORS:

At the end of financial year 2023-24, the composition of Board was as under:

Name of Director	Designation
Dr. Subhash Khuntia	Part-Time Chairman & Independent Director
Mr. Ajay Kanwal	Managing Director & Chief Executive Officer
Mr. K S Raman	Executive Director
Mr. Ramesh Ramanathan	Non-Executive Director
Mr. R Ramaseshan	Independent Director
Mrs. Chitra Talwar	Independent Director
Mr. Rahul Khosla	Non-Executive Director
Mr. K Srinivas Nayak	Independent Director
Mr. Pammi Vijaya Kumar	Independent Director

During the financial 2023-24, the Board met 21 times and the intervening gap between the meetings were within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.

STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS:

All Independent Directors have submitted the required declarations that they meet the criteria of Independence as laid down under Section 149(6) of the Companies Act 2013 and Regulation 16(1)(b) and Regulation 25(8) of the SEBI Listing Regulations. The Board had assessed the veracity of the confirmations submitted by Independent Directors, as required under Regulation 25(9) of the SEBI Listing Regulations.

In the opinion of the Board, all Independent Directors are independent of the Management. During the year, there has been no change in the circumstances affecting their status as Independent Directors of the Bank and they are not debarred from holding the office of Director under any order of the Securities and Exchange Board of India or any other statutory/regulatory authority.

In the opinion of the Board, Independent Directors are persons of integrity and possess the requisite experience, expertise and proficiency required under all applicable laws and policies of the Bank.

PERFORMANCE EVALUATION:

The Nomination & Remuneration Committee in their meeting held on 27th April 2024 took note of the evaluation report of the Boards performance including Directors own performance and committees of the Board. The Committee deliberated on various evaluation attributes indicated in the evaluation questionnaire for all directors and after due deliberations made an objective assessment and evaluated that all directors in the Board have adequate expertise drawn from diverse backgrounds and businesses and bring specific competencies relevant to the Banks business and operations.

The Committee found that the performance of all Directors was quite satisfactory and the functioning of the Board and its Committees were quite effective. The Committee evaluated Boards composition and Boards performance as a whole and expressed satisfaction in this regard. Further, the Committees suggestion/feedback were duly taken note of by the Management.

DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Sections 134(3) (c) and 134(5) of the Companies Act, 2013 the Directors hereby confirm that –

• In the preparation of annual accounts for the year ended 31st March 2024, applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

• The Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2024 and of the profits of the Company for the year ended on that date;

• The Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing & detecting fraud and other irregularities;

• The Directors have prepared the annual accounts on a ‘going concern basis;

• The Directors have laid down internal financial controls to be followed and that such internal financial controls are adequate and are operating effectively; and

• The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

FAMILIARISATION PROGRAMMES FOR INDEPENDENT DIRECTORS:

Independent Directors of the Bank have attended various programs conducted by CAFRAL, IICA, Ministry of Corporate Affairs and IDRBT. They have also attended strategy discussions organised by the management team of the Bank. Details of the programmes attended by Independent Directors are available on the website of the Bank at https:// www.janabank.com/about-us/investor-relations/familiarisation-programme/

AUDIT COMMITTEE RECOMMENDATIONS:

The Board has accepted all recommendations of the Audit Committee and hence no further explanations have been provided for in this Report.

KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT PERSONNEL:

As of 31st March 2024, Mr. Ajay Kanwal, Managing Director & CEO, Mr. K S Raman, Executive Director, Mr. Abhilash Sandur, Chief Financial Officer and Mrs. Lakshmi R N, Company Secretary & Compliance Officer were the Key Managerial Personnel of the Bank in terms of Section 203(1) of the Act and Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

During the year, Mr. Buvanesh Tharashankar ceased to be Chief Financial Officer of the Bank with effect from the close of business hours on 20th July 2023 and thereafter Mr. Abhilash Sandur took charge as the Chief Financial Officer of the Bank.

Ms. Usha Sonavaria ceased to be Chief Human Resource Officer of the Bank with effect from the close of business hours on 16th August 2023 and thereafter Mr. Amit Bakshi took charge as the Chief Human Resource Officer of the Bank.

AUDITS:

Statutory Audit

For the financial year 2023-24, there are no qualification(s) or reservation(s) or adverse remark(s) or disclaimer(s) in the audit reports of the Standalone Financial Statements. Hence explanations or comments on the same are not required from the Board of Directors.

Audit for the financial year has been conducted by M/s. Brahmayya and Co., (Firm registration no. 000515S) Chartered Accountants, and M/s. M. M. Nissim and Co. LLP (Firm registration no. 107122W/W100672), Chartered Accountants, as Joint Statutory Auditors of the Bank.

Secretarial Audit

The Company has complied with all applicable provisions of the Secretarial Standards, provisions of the Companies Act, 2013.

Secretarial Audit for the year has been conducted by Mr. Nagendra D Rao, Practicing Company Secretary (M. No. FCS 5553 and COP 7731). The Secretarial Audit Report for the financial year 2023-24, forms part of the Annual Report.

The comments on the observations made by Secretarial Auditor are as under:

Observation 1: As per the provisions of Regulation 18 (1)(d) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the chairperson of the Audit Committee shall be present at the Annual General Meeting ("AGM") of the Bank. However, Mr. Srinivas Nayak, Chairman of Audit Committee was not present at the AGM held on 23rd June, 2023.

The absence of Chairman of Audit Committee has been taken note of by the Board. It was further noted that the absence of Mr. Srinivas Nayak from Annual General Meeting dated 23rd June 2023 was due to his pre-occupancy on that day.

Observation 2: Pursuant to the provisions of Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, every listed Company shall submit their Financial Results for every quarter except the last quarter within 45 days from the date of end of each quarter. However, the Bank has delayed submission of the financial results for the quarter ended December 31, 2023, which was submitted on 22nd February 2024.

The Bank listed its equity shares on the National Stock Exchange Limited and BSE Limited effective from 14th February 2024. Further, the Board considered the quarterly results for the quarter ended 31st December 2023 in its meeting dated 22nd February 2024 and submitted the results with stock exchanges on the same date. With the above exception, the Board placed on record its intention to comply with the statutory requirements within the stipulated timelines.

Cost Audit

The Bank is not required to appoint a Cost Auditor. Therefore, maintenance of cost records as specified under subsection (1) of section 148 of the Companies Act, 2013, is not applicable to the Bank.

During the year under review, no frauds have been reported by the Statutory Auditors or the Secretarial Auditors under Section 143 (12) of the Companies Act, 2013.

INTERNAL CONTROL SYSTEMS:

The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Banks policies, the safeguard of its assets, prevention and detection of frauds and errors, the accuracy and completeness of accounting records, and the timely preparation of reliable financial disclosures.

EMPLOYEES STOCK OPTION SCHEME AND OPTIONS GRANTED DURING FY 2023-24:

The Bank currently has two ESOP schemes i.e., (1) Employee Stock Option Scheme, 2017 and (2) Employee Stock Option Scheme, 2018.

Applicable disclosures with regard to Employee Stock Options granted during FY 2023-24 is provided as Annexure I to this report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Pursuant to Section 186(11) of the Companies Act, 2013 loans made, guarantees given, securities provided or acquisition of securities by a banking company in the ordinary course of its business are exempted from the disclosure requirement under Section 134 (3)(g) of the said Act.

Details of Investments are given in Schedule 8 to the Financial Statements which forms a part of the Annual Report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

During the year under review, there were no contracts or arrangements with related parties as referred to under Section 188(1) of the Companies Act, 2013.

RISK MANAGEMENT FRAMEWORK:

The Bank has put in place a comprehensive Risk Management framework supported by detailed policies and processes for management of Credit Risk, Market Risk, Liquidity Risk, Operational Risk and various other risks.

The Risk Management Committee of the Board has established a formal Risk Appetite Statement which governs the risk-taking activities in the Bank. The Risk Management Committee exercises oversight on the implementation of various risk management policies and processes and is also in charge of review of these and other policies from the risk perspective.

MATERIAL CHANGES AND COMMITMENTS, AFFECTING THE FINANCIAL POSITION OF THE BANK:

There are no material changes and commitments, affecting the financial position of the Bank subsequent to the close of the FY 2023-24.

EXTRACT OF ANNUAL RETURN:

Pursuant to Section 92(3) of Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return for the financial year 2023-24 is available in the Banks website at: https://www.janabank.com/about-us/investor-relations/annual-return/

CORPORATE GOVERNANCE:

The Corporate Governance Report as detailed in Schedule V of SEBI (LODR) Regulations, 2015 along with the certificate issued by Mr. Nagendra D Rao, Secretarial Auditors of the Bank confirming compliance with Corporate Governance requirements is annexed to this report as Annexure II and Annexure III respectively.

DEPOSITS:

Being a banking company, disclosures relating to deposits as required under Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Section 73 to 76 of the Act are not applicable to the Bank.

NOMINATION & REMUNERATION POLICY:

The Bank has adopted a Nomination and Remuneration Policy on Directors Appointment and Remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters as provided under the provisions of Section 178(3) of the Companies Act, 2013. The Policy is available at the website of the Bank at https://www.janabank.com/about-us/leadership-governance/policies/

INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Bank has adopted a Policy for Prevention of Sexual Harassment ("POSH Policy") at the workplace under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee ("ICC") has been constituted in compliance with the provisions of the Act and the POSH Policy to review, investigate and take suitable action on complaints. An Appellate Committee has also been constituted under the Policy before whom a complainant who is not satisfied with the decision of the ICC, can prefer an appeal.

Details of complaints received and resolved by the ICC during the FY 2023-24 are as follows:

Number of complaints pending at the beginning of the year	0
Number of complaints received during the year	5
Number of complaints disposed of during the year	5
Number of complaints pending at the end of the of the year	0

CORPORATE SOCIAL RESPONSIBILITY (CSR) INITIATIVES:

During the financial year 2023-24, the Bank undertook 40 CSR projects totaling to Rs. 2.4 crores. The category of CSR contribution has been provided below. Further, the detailed report along with composition of the Committee on CSR has been annexed to this report as Annexure IV.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

Pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, the Company has established a vigil mechanism for directors and employees to report genuine concerns. The vigil mechanism forms a part of the Whistle Blower Policy, which has been approved by the Board of Directors in their meeting held on 05th August 2014 as a NBFC-MFI.

After conversion into a Small Finance Bank, the Bank Board has approved the Whistle Blower Policy and Vigilance Policy, in their meeting held on 08th February 2018. The Policy has been hosted on the website of the Bank.

AWARDS AND RECOGNITIONS:

Calendar Year	Awards
2024	National Best Employer & Dream Company to work for by World HRD Congress
2024	Best Fintech & DPI Adoption by IBA (Indian Banking Association
2023	Best Data Quality- SFB Consumer Award 2022-23 by TransUnion CIBIL Limited
2022	Award for ‘Best IT Risk Management by Indian Banks Association
2020	Campaign Decade - Plus - award by RMAI Flame Awards Asia
2020	Featured in ‘Fortune – The top 500 list of largest corporations in India for the year 2020
2020	Winner at the cfi.co Inclusive Finance Awards for ‘Best Inclusive Financial Service India 2020 by Capital Finance International
2020	CSR award for excellence in BFSI sector by Golden Globe Tigers 2020 in December 2020
2020	Campaign Decade - Plus - Gold award by RMAI Flame Awards Asia
2019	Runner-up at the Global Leadership Award 2019 by Dale Carnegie
2018	Winner at the cfi.co Finance Awards for ‘Best Inclusive Financial Service India 2018 by Capital Finance International
2017	Featured in ‘Fortune – The top 500 list of largest corporations in India for the year 2017
2017	Goodwill Brand Award 2017 by Process Evaluators and Research, BARC Asia
2016	‘Best Financial Service Firm in India by VC Circle for the year 2016

PARTICULARS OF EMPLOYEES:

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Act, the same would be available for inspection during working hours at the Registered Office of the Bank. A copy of this statement may be obtained by the Members by writing to the Company Secretary of the Bank.

The ratio of the remuneration of each Director and employees of the Bank as required under the provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are forming part of this report as Annexure V.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

A. Conservation of energy: Not applicable

B. Technology absorption: Not Applicable

C. Foreign exchange earnings and Outgo: Foreign exchange earnings: NIL and Foreign exchange expenditure: Rs. 3.76 Crores.

OTHER DISCLOSURES:

• Details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year: Not applicable, as no such application was made by the Bank.

• Related party transactions:

The details of related party transactions have been provided as an Annexure VI to the Board Report in Form AOC-2.

ACKNOWLEDGEMENTS:

The Board of Directors place on record its gratitude for the support and co-operation from Reserve Bank of India, Securities Exchange Board of India, Customers, Shareholders, Vendors and Employees of the Bank.

For and on behalf of the Board

For JANA SMALL FINANCE BANK LIMITED

Bengaluru	Dr. Subhash Khuntia	Ajay Kanwal
29th April 2024	Part-time Chairman & Independent Director	Managing Director & CEO
	DIN: 05344972	DIN: 07886434