Jio Financial Services Limited, the demerged financial business of Reliance Industries, is a non-banking financial company (NBFC) holding, whose shares were listed on the stock exchanges on August 21. After the demerger and subsequent listing of JFS on the stock exchanges, the fledgling JFS commands a market capitalisation of around Rs 1.6 lakh crore- bigger than several public sector banks and next only to that of State Bank of India (SBI)
Reliance Industries Limited Chairman and MD Mukesh Ambani established a beachhead in the financial services industry by acquiring a payments bank licence in 2015, two months after the Reserve Bank of India invited applications for this new class of banks. Payments banks are meant for payments and remittances, can accept small savings, and issue debit cards but not credit cards
In 2019, RIL partnered with Microsoft to cover the digitisation needs of the MSMEs, suppliers, and dealers. RIL and Microsoft’s partnership was to help MSMEs adopt leading technologies, such as data analytics, AI, blockchain, etc. In July 2021, RIL bought out Yellow Pages company Justdial in a cash deal worth Rs 5,710 crore that gave it a ready-made database for lending
The market got a whiff of the group’s ambitions way back in 2015, but Reliance never scaled up the business. Then, in November 2022, ICICI Bank veteran K.V. Kamath joined the RIL board as an independent director
On July 8, 2023, a week after Jio Financial Services was demerged from the financial services business of Reliance Industries, JFS announced that Ambani’s daughter Isha had joined its board. On August 21, at the listing ceremony of JFS, Kamath, now its Chairman, said, “It’s possible to predict that within the next eight to nine years, our GDP could double, reaching around $8 trillion. This presents a tremendous opportunity for India.” Notably, JFS partnered with the world’s largest asset manager BlackRock to enter the asset management space
Mukesh Ambani dubbed Jio Financial Services the group’s ‘fourth engine’ after oil, telecom, and retail. He explained the JFS gambit to shareholders at RIL’s annual general meeting (AGM) on August 28, saying “JFS has been conceptualised to fill a critical gap in the financial services needs of a large section of the Indian economy, mainly in the informal and underserved sectors in rural, semi-urban, and urban areas.”
The high net worth at Rs 1.2 lakh crore will allow Jio Financial Services to leverage the balance sheet for lending. The current m-cap of JFS is only next to SBI among PSBs
As Mukesh Ambani’s next big bet from the stable of his $118-billion conglomerate, Jio Financial Services has many factors that could work for it but there are also certain factors that could go against JFS
Jio Financial Services has entered the highly competitive NBFC lending space, where Bajaj Finance is the leader. Shriram Finance, Tata Capital, Cholamandalam Investment and Finance Aditya Birla Capital are other top NBFCs from corporate houses. However, there is headroom for growth as NBFCs have a share of less than 20 per cent in the overall lending market
All figures in INR crore; Data as of March 31, 2023; Source: Annual Reports