Jio Financial Services Applies to RBI for Conversion from NBFC to CIC
Jio Financial Services, the demerged entity of energy-to-telecom conglomerate Reliance Industries Ltd (RIL), has asked for the Reserve Bank of India’s (RBI) approval for conversion into a core investment company (CIC). Jio Financial announced that it has submitted an application with the RBI for converting to a CIC from a non-banking financial company (NBFC) after a regulatory mandate. "This is to inform you that as mandated by the Reserve Bank of India (while granting its approval for change in the shareholding pattern and control of the Company pursuant to the demerger of the Financial Services Business from Reliance Industries Limited into the Company), the Company has submitted the application for conversion of the Company from NBFC to CIC", Jio Financial Services said in a regulatory filing.
CICs are NBFCs that invest in the equity shares, preference shares convertible bonds, or loans of their group companies. They hold control over their group companies and do not trade in their shares except for the purpose of dilution or disinvestment. CICs are passive holding companies and do not engage in any other financial activity.
As per RBI guidelines, CICs are NBFCs carrying on the business of acquisition of shares and securities on several conditions and must hold at least 90% of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies. "This move necessitates JFS to invest at least 90% of its net assets within its group companies, focusing on equity shares, preference shares, bonds, and debentures", said Sonam Chandwani, Managing Partner KS Legal & Associates.
Meanwhile, Jio Financial Services recently received RBI approval for the appointment of Isha Ambani, Anshuman Thakur, and Hitesh Sethia as its directors. Jio Financial Services had reported a net profit of 668.2 crore in the quarter ended September 2023, doubling from the previous quarter led by higher income from operations. The company’s total revenues rose 47% sequentially to 608 crore.
This was the first financial result of the company after it got listed on the stock exchanges on August. After the demerger of the financial services business of Reliance Industries, Jio Financial Services plans to enter consumer finance, asset management and insurance. At Reliance Industries’ Annual General Meeting (AGM) in August this year, its chairman Mukesh Ambani announced that Jio Financial Services will enter the insurance segment to offer life, general and health insurance products.
The company had earlier partnered with the world’s largest asset manager BlackRock to set up an asset management company with a combined investment of 300 million. JFS had said that the joint venture, Jio BlackRock, would deliver "tech-enabled access to affordable, innovative investment solutions for millions of investors in India".
