Jio Financial unveils groundbreaking rental model to offer desktops, laptops, phones, and more on demand

Bajaj Finance may breathe a sigh of relief as Jio Financial Services Ltd, seen by market participants as direct competition to the Pune-headquartered non-banking finance company (NBFC), is initially concentrating on device-as-a-service (DaaS) and supply chain financing. 

The much talked about consumer durables financing and unsecured loans will also be scaled up but at a later stage. 

The company’s DaaS model for consumer devices (AirFiber, phone, laptop) is expected to create an altogether new market as it was not something large NBFCs or banks are focussed on. “There is a lower risk due to asset ownership,” the company stated in a presentation to investors. 

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In today’s business landscape, companies are now gravitating towards DaaS and computer leasing strategies as a means to maintain a lean fixed-cost structure. This shift not only enhances the overall competitiveness of businesses but also boosts productivity. 

These rental arrangements are expected to create a new market for lenders. In addition, such models effectively transfer the burden of device maintenance, potential upgrades, and eventual disposal costs from the company to the service provider. 

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Similar to the groundbreaking success achieved by Bajaj Finance with its innovative consumer durable financing model, which ventured into small-ticket loans that were often overlooked by banks and NBFCs, Jio Financial Services is stepping into DaaS as a financing model for corporates in India. 

This could be Jio’s USP in the market which is crowded with financing products. 

The company is also tapping solutions to help suppliers with their money needs for day-to-day operations. 

In the MSME loans segment, the company will provide money to distributors and suppliers for their everyday expenses. They are focussing on small businesses, especially those that usually end up using expensive informal channels for smaller loans. 

“JFS has been envisioned to address a significant gap in the financial services requirements of a substantial segment of the Indian economy, particularly in the informal and underserved sectors across rural, semi-urban, and urban areas,” Mukesh Ambani shared with shareholders a few months ago. 

Ambani emphasised the importance of innovative digital-first solutions and digital finance as the primary differentiators. 

Ambani’s Jio Financial Services, dubbed as the ‘fourth engine’ after oil, telecom, and retail, aims to leverage its established consumer-facing retail and telecom sectors. 

The company has said that there is an increased focus on secured lending given current market and regulatory developments. This is probably the reason why Jio is first focussing on secured products followed by consumer durables and unsecured loans. 

The unsecured market is already heating up with RBI increasing the risk weights on such loans. 

“Home loans and consumer durable and unsecured loans are in the pipeline,” states the company.