Jio Financial on November 21 announced that it has submitted an application to the RBI for conversion to a non-banking finance company (NBFC) CIC following a regulatory mandate.
“This is to inform that by order of the Reserve Bank of India (giving its approval for a change in the shareholding pattern and control of the Company pursuant to the demerger of the Financial Services Business of Reliance Industries Limited into the Company), the Company submitted the application for conversion of the Company from NBFC to CIC,” Jio Financial Services said in a regulatory filing.
Read also: Jio Financial Services considering maiden bond issue, plans to raise ₹5,000-10,000 crore: Report
CICs are NBFCs that invest in the equity shares, preference shares or convertible debentures or loans of their group companies. They keep control of their group companies and do not trade in their shares except for the purpose of dilution or divestment.
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 terms and must hold at least 90% of its net assets in the form of investment in equity shares, preference shares, debentures, debentures, debentures or debts. loans in group companies.
“This move requires 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.
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According to Chandwani, with this conversion, Jio Financial could refine its financial operations and simplify its investment approach.
“This transformation is likely to streamline JFS’s investment approach, emphasizing more controlled and focused strategies that could improve its influence over its subsidiaries and refine its financial operations,” she said.
She believes the impact on Jio Financial’s shareholders will depend on how effectively the company adapts to this focused investment model and its resulting effects on profitability and financial health.
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 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 crores.
Read here: Jio Financial Services profit doubles consecutively to ₹668.2 crore in Q2 on higher revenue
This was the company’s first financial result after it listed on the stock exchanges on August 21. After the spin-off of financial services from 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.
Read here: Jio Financial Services to enter insurance segment; can partner with global players, says RIL chairman Mukesh Ambani
The company earlier partnered with the world’s largest investment manager BlackRock to set up an investment management company with a combined investment of $300 million. JFS said the joint venture, Jio BlackRock, will deliver “technology-enabled access to affordable, innovative investment solutions for millions of investors in India.”
At 2:15 pm, the share price of Jio Financial Services was trading 0.32% higher at ₹222.20 apiece on the BSE.
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Updated: 23 Nov 2023, 14:16 IST