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Jio Financial Services, a subsidiary of Reliance Industries, has received the green light from the Reserve Bank of India (RBI) to transform from a Non-Banking Financial Company (NBFC) into a Core Investment Company (CIC). This significant development marks a pivotal shift in the company's strategic direction, positioning it as a major player in the investment landscape.
The journey to becoming a CIC began in November 2022 when Jio Financial Services submitted an application to the RBI seeking the conversion. This move was undertaken following the demerger of Reliance Industries' financial services division, aiming to establish Jio Financial Services as a separate and focused entity within the conglomerate.
A CIC, as defined by the RBI, is a specialized NBFC with a minimum asset size of ₹100 crore. Its primary objective, as outlined in the RBI circular of December 20, 2016, is to invest in shares and securities, adhering to specific restrictions. At least 90% of the CIC's net assets must be allocated to investments in bonds, debentures, equity shares, preference shares, debt, or loans extended to group companies.
The transition to a CIC will subject Jio Financial Services to the regulatory oversight of the Reserve Bank of India. The company's transformation into a CIC signifies its commitment to becoming a significant player in the investment market, focusing on strategic acquisitions and asset management.
Jio Financial Services made its official debut on the stock exchanges on August 21, 2023, marking a significant milestone in its journey. On Thursday, the company's share price closed flat at ₹348.05 apiece on the BSE, reflecting the market's initial reception of its transformation.
The parent company, Reliance Industries, is scheduled to release its financial results for the June quarter on Friday, July 19. In the fourth quarter ending March 2024, Jio Financial Services recorded a 6% increase in consolidated net profit, reaching ₹311 crore, driven by improved income. The company also reported a profit of ₹294 crore for the quarter ending December.
Jio Financial Services reported a multi-fold increase in consolidated net profit for FY24, rising to ₹1,605 crore from ₹31 crore in the previous fiscal year. Revenue also showed marginal growth, climbing from ₹414 crore in the December quarter to ₹418 crore. These positive financial indicators reflect the company's growth trajectory and its ability to navigate the evolving financial landscape.
Beyond investment and lending, Jio Financial Services offers a comprehensive suite of services, including payment gateways, banking, and payment aggregation. The company's diversified portfolio positions it as a one-stop shop for various financial needs, catering to both individuals and businesses.
The RBI's approval of Jio Financial Services' transition to a CIC signifies its potential as a key player in the Indian investment landscape. With a strong financial foundation and a comprehensive service offering, the company is well-equipped to capitalize on the opportunities that lie ahead. As it embarks on its new journey as a CIC, Jio Financial Services is poised to play a vital role in shaping the future of the Indian financial sector.
Source: Jio Financial Services gets RBI green light to become a core investment company