RBI Approves Jio Financial's Transition from NBFC to Core Investment Company
Jio Financial Services (JFS), recently separated from Reliance Industries Ltd (RIL), has submitted an application to the Reserve Bank of India (RBI) seeking to transform itself from a non-banking financial company (NBFC) into a core investment company (CIC) as required by regulatory guidelines.
JFS, which was demerged from RIL in July and subsequently listed on the stock exchanges in August, has quickly positioned itself as a significant competitor to fintech startups across various sectors, including payments, insurance, and asset management. In a filing on November 21, the company announced that it had applied to the RBI to transition from an NBFC to a CIC in order to adjust its shareholding pattern and governance structure following its demerger from Reliance Industries, in compliance with RBI regulations.
As per RBI guidelines, CICs are companies primarily investing in their group entities via equity, preference shares, convertibles, or loans. These entities function as passive holding companies, maintaining control over their group companies without engaging in other financial activities.
Jio Financial Services has denied reports of raising money through bond issuance, refuting claims that suggested a potential fundraising of up to INR 10,000 crore. The company clarified that it complies with disclosure obligations under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and agreements with stock exchanges.
Earlier this year, JFS partnered with BlackRock, the world's largest asset management company, to enter India's mutual fund market. Recently, JFS announced that the RBI has approved the appointments of Isha Ambani, Anshuman Thakur, and Hitesh Kumar Sethia as company directors.
The company recently introduced a soundbox, along with a variety of other products, including personal and merchant lending, insurance, and retail payments. JFS competes with major players in the fintech sector such as Paytm, PhonePe, BharatPe, PB Fintech, InsuranceDekho, CRED, Zerodha, and Groww. In Q2 FY24, the company’s consolidated profit after tax (PAT) doubled sequentially to INR 668.2 crore, while its operating revenue rose over 61% quarter-on-quarter to INR 608 crore.
The analysis forecasts that the domestic fintech market will reach $2.1 trillion by 2030, with a projected CAGR of 18% from 2022. Lending tech is expected to dominate, making up $1.3 trillion of the market. JFS plans to transform the fintech sector with a direct-to-consumer (D2C) strategy, focusing on cost efficiencies and personalized customer interactions.
