The Business Bytes
TBB BUREAU
MUMBAI, OCT 21, 2022
The board of Reliance Industries (RIL), at its meeting held on Friday, approved to demerge the company’s financial services undertaking into Reliance Strategic Investments (RSIL). The financial services undertaking will be renamed Jio Financial Services Limited (JFSL).
JFSL would be listed on the Indian stock exchanges. RSIL is currently a wholly-owned subsidiary of RIL and is a RBI-registered non-Deposit taking Systemically Important (ND-SI) Non-Banking Financial Company.
Pursuant to the Scheme, RIL shareholders will receive 1 equity share of JFSL of face value Rs 10 for 1 fully paid-up equity share of Rs 10 held in RIL. The entitlement ratio was based on the recommendations of the independent valuer and merchant bankers.
The investment of RIL in Reliance Industrial Investments and Holdings Limited (RIIHL), which is a part of the financial services undertaking of RIL, will stand transferred to JFSL. RIIHL is the ultimate beneficiary of 6.1% RIL shares through its interest in Petroleum Trust and Reliance Services and Holdings.
Additionally, through the scheme, JFSL will acquire liquid assets to provide adequate regulatory capital for lending to consumers, merchants, etc., and incubate other financial services verticals such as insurance, payments, digital broking, asset management for at least the next 3 years of business operations. The regulatory licenses for the key businesses are in place.
With secular growth drivers, the Indian financial services sector is poised to undergo a digital transformation. The sector presents a large, under penetrated and growing addressable market, especially for retail and small-business focused product categories. JFSL and its subsidiaries (“JFS”) will leverage the technology capability of Reliance and focus on digital delivery of financial products to democratize financial services access for 1.4 billion Indians.
Reliance has been developing and fostering a vibrant digital led-financial services platform through various digital applications. Reliance has developed best-in class applications having high customer engagement metrics and differentiated value propositions in their respective categories. The current footprint touches more than 20 million consumers.
JFS plans to launch consumer and merchant lending business based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting. JFS will continue to evaluate organic growth, joint-venture partnerships as well as inorganic opportunities in insurance, asset management and digital broking segments.
JFS will build a business of scale across attractive consumer segments to create value for every stakeholder. This coupled with a strong capital base and unparalleled digital infrastructure capabilities would enable JFS to offer a differentiated value proposition for its customers.
JFS will also onboard an experienced management team and adopt best-in-class governance and risk management practices across verticals to create one of India’s leading financial services enterprises.
Commenting on the demerger of the financial services undertaking, Mukesh Ambani, Chairman and Managing Director, Reliance Industries Limited, said: “JFS will be a truly transformational, customer centric and digital-first financial services enterprise offering simple, affordable, innovative and intuitive financial services products to all Indians. JFS will be a technology-led business, delivering financial products digitally by leveraging the nation-wide omni-channel presence of Reliance’s consumer businesses. JFS is uniquely positioned to capture multiple growth opportunities in financial services bringing millions of Indians into formal financial institutions.”
