Reserve Bank of India Approves Conversion of Jio Financial Services to Core Investment Company

The Reserve Bank of India approved the conversion of Jio Financial Services from a Non-Banking Financial Company (NBFC) to a Core Investment Company (CIC), as reported by the company in a filing on Thursday.
Jio Financial Services, which is a demerged entity of the conglomerate Reliance Industries Ltd (RIL), had submitted an application to the RBI in November 2023 to change its status from an NBFC to a Core Investment Company.
The conversion was mandated by the banking regulator as part of the approval process for the change in the shareholding pattern and control of the company following the demerger of the financial services business from Reliance Industries Limited (RIL).
The official debut of Jio Financial Services on the stock exchange occurred on August 21, 2023, and its shares surged more than 1.5 percent during the opening session on Friday.
One of the conditions set by the RBI for the Core Investment Company is that it must hold not less than 90 percent of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt, or loans in group companies.
As a Core Investment Company, Jio Financial Services will primarily focus on investments in and the management of its subsidiary companies. This transition involves several key changes in the company’s operational framework.
The transformation to a CIC structure offers operational flexibility and allows the company to focus on core investment activities without engaging in other financial services. Additionally, it enables Jio Financial Services to delineate the financials and operations of each subsidiary, providing better value discovery for investors.
Unlike typical NBFCs, CICs are non-deposit taking financial companies that have their assets predominantly invested in the equity shares, preference shares, or debt instruments of their group companies. This change allows CICs to explore different sectors and diversify their investment portfolio, providing flexibility to adapt to changing market conditions.