Jio Financial Services Awaits RBI Approval To Convert Into CIC; Details Here

Jio Financial Services (JFS), the financial arm of India's largest conglomerate by market capitalisation is seeking approval from the Reserve Bank Of India to convert into a Core Investment Company (CIC) from the status of NBFC. Recently, the company has announced a joint venture of equal share with the world's largest investment company, Blackrock for an asset management business with an initial investment of around $ 300 million.

'This is to inform that as mandated by the Reserve Bank of India (while granting its approval for change in the shareholding pattern and control of the Company under the demerger of the Financial Services Business from Reliance Industries Limited into the Company), the Company has applied for conversion of the Company from NBFC to CIC', the newest and third largest Indian NBFC notifies its shareholders and institutional investors through an exchange filing.

As per the RBI norms, a CIC is a company with an asset size of more than Rs. 100 crore, which holds either 90% or above net assets in the form of equity investments, preference shares, bonds and debentures in group companies. A CIC company can accept public funds and cannot perform trades in its investment in shares, bonds, debts or loans in group companies. It is allowed only to perform block deals for dilution or disinvestment.

Last week on November 15th, the RBI approved the appointment of Ambani's daughter Isha Ambani, a Yale University Graduate & MBA from Stanford University, Anshuman Thakur, an MBA from IIM Ahmedabad and CA Hitesh Kumar, a Harvard Business School alumni as the new directors of Jio Financial Services for next six months, if the company fails to implement the proposal.

Mukesh Ambani, the chairman and managing director of RIL in the annual general meeting held on August 28th this year expressed that, "JFS will enter the insurance segment to offer simple, yet smart, Life, General, and Health insurance products through a seamless digital interface, potentially partnering with global players. It will use predictive data analytics to co-create contextual products with partners and cater to customer requirements in a truly unique way."

In addition to this, the Indian billionaire businessman also stated that JFS would not only compete with the current industry benchmark but would also explore blockchain-based platforms and Central Bank Digital Currency, with the highest standard of security and regulatory norms to ensure transaction data safety at all times.

JFS disapproved the news report by Reuters regarding raising money by issuing bonds. The report expressed that the company might be able to raise some Rs. 10,000 crore through bond issuance and four bankers suggested that JFS could tap the market by March 2024, with subject to regulatory approvals. Contradicting the JFS statement, a news report by Business Standard revealed that JFS is in initial discussions with bankers for its five-year inaugural bond issuance to raise between Rs. 5,000 crore to Rs. 10,000 crore. Market analysts expressed that the bonds might provide 15 to 20 basis points higher than RIL bonds that were issued in November beginning, raising almost Rs. 20,000/- crore through 10-year bonds at 7.79% coupon rate, the second highest bond issuance by an Indian company.

The first quarterly results posted by the company, in a successive order reported a profit of Rs. 668.18 crores, more than a 100 per cent quarterly jump on year-on-year basis.

On November 22nd, JFS shares jumped marginaly to end at Rs Rs. 221.50/- per share on BSE, totalling its market cap to over Rs 1.42 lakh crore. The stock gained by at least 1.4% during the trading hours to hit an intraday high of Rs 223.30 apiece.