New Delhi, July 1 -- Jana Holdings Ltd, the parent company of Jana Small Finance Bank, and a related company have suffered a credit rating downgrade after failing to make debt repayments to private equity firm TPG and other bondholders on time.
Jana Holdings and its own parent company, Jana Capital Ltd, said Tuesday India Ratings & Research has downgraded their non-convertible debentures of nearly Rs 363 crore and Rs 1,468 crore, respectively, to 'IND D' from 'IND BB/Stable'. The NCDs are largely held by TPG.
Overall, Jana Holdings and Jana Capital have debt repayments of around Rs 4,200 crore that were originally due on June 30, according to India Ratings.
The new "default" rating comes after the debenture holders of these companies-primarily TPG-agreed to extend the maturity of the rated NCDs to December 31, 2026, from June 30 earlier.
The rating agency said in a note that it considered this amendment as a modification of the original contractual terms, and downgraded their debt rating.
"The tenor extension has been undertaken to avoid a potential default on the original due date, and has therefore been treated as a Distressed Debt Exchange and a default by Ind-Ra," it said.
Both Jana Holdings and Jana Capital are non-operating entities, with no cash-flows of their own, and are being merged. Jana Holdings owns a 16.9% stake in Jana SFB.
Late last month, Jana Holdings and Jana Capital informed stock exchanges that they had proposed various amendments to the debenture trustee deed. These included the removal of the internal rate of return promised to the investor as well as redemption premium provisions and all related references. The amendments also proposed the proceeds realised from the sale of shares in Jana Small Finance Bank will be utilised to redeem the debentures.
Separately, TPG said in a separate filing that it was considering only amendment-the extension of the debentures' tenor. Subsequently, the bond holders approved only the extension of the tenor and declined to do away with the removal of IRR and redemption premium provisions.
According to India Ratings, Jana Holdings and Jana Capital had previously met debt repayments through refinancing or share sales in the small finance bank but were unable to do so on this occasion.
In April, Jana Holdings divested a 4.9% stake in Jana Small Finance Bank to the TVS Group for Rs 193 crore. It intended to use this amount towards part-servicing of its debt obligations.
TPG owned an 8.11% stake in Jana Small Finance Bank as of March-end, stock-exchange data show. The lender's other investors include Morgan Stanley PE, Harbourvest, Volrado Venture Partners, Singularity Ventures, Ananta Capital, and Havells' family office.
Meanwhile, the debt repayment troubles could impact Jana SFB's chances of transitioning to a universal bank.
In October last year, the Reserve Bank of India returned Jana SFB's application for a universal bank due to non-fulfilment of eligibility criteria.
Jana Small Finance Bank did not specify what criteria it did not meet. According to RBI norms, a small finance bank looking to transition to a universal bank must maintain a minimum net worth of Rs 1,000 crore, report net profits in the last two financial years, and maintain gross NPA and net NPA of less than or equal to 3% and 1%, over the same period.
The lender's net profit fell to Rs 326 crore in FY26 from Rs 501 crore the year before. It closed FY26 with a gross NPA ratio of 2.3%.
Published by HT Digital Content Services with permission from VC Circle.