Jio Financial Services

Jio Financial Services Limited is an Indian financial services company that was originally a subsidiary of Reliance Industries (RIL). It became an independent entity and was listed on the Indian stock exchanges in August 2023. The company provides financial services, including payment services and insurance broking.

Its subsidiary Jio Finance holds an NBFC license from the RBI. Another subsidiary, Jio Payments Bank, is also a payments bank registered in India.

History

Jio Financial Services was initially part of Reliance Industries' financial services businesses. It separated in a demerger to form a new firm, following which it was listed on the stock exchanges. Reliance Industries transferred Rs 15,500 crore of cash and liquid investments to Jio Financial Services as part of the demerger scheme. This gave Jio Financial Services a liquid asset base of Rs 20,700 crore. Investors in Reliance also received 1 equity share of Jio Financial Services for every share they held in Reliance Industries.

The company was listed on the stock exchanges on August 21, 2023. However, it was removed from BSE and FTSE indices in September 2023.

Multiple index funds that tracked the NIFTY 50 and the BSE SENSEX, had large quantities of Reliance Industries in their portfolio. They received a share of JFSL for every share of Reliance they held. These shares found a temporary home in these indices, but it was going to be removed since it did not meet any of the criteria. The index funds tracking these indices were forced to sell JFSL shares worth roughly around ₹2,700 crore before the stock was removed from the indices. This led to the stock hitting it's lower circuit for multiple days in a row, as index funds dumped the stock in anticipation of it being dropped from the index.

JFSL shares were to be excluded from Nifty and Senex on August 23, but with the heavy beating and the stock hitting lower circuit limits consistently, the exclusion has been extended to August 28.

The company also entered the asset management company (AMC) business in partnership with BlackRock, by forming Jio BlackRock, a 50:50 joint venture.

As of the end of the June quarter, the company had a liquid asset base of Rs 20,700 crore.

In May 2024 JioFinance, an app that aims to be a one-stop shop for digital payments, loans and insurance was launched in the Indian market.

Controversies

Related Party Transactions

In 2024, Jio Financial Services opened a subsidiary called Jio Leasing Services Ltd, an unrelated leasing services business. The subsidiary's first customer was another promoter owned company, Reliance Retail. This was a massive $4.4 billion deal and some commentators saw it as a way to prop up the revenue of the promoter's retail company.

References

1. Jio Payments Bank
2. Jio
3. Jio Platforms
4. Mutual funds in India
5. Reliance Retail
6. Rajiv Mehrishi
7. K. V. Kamath
8. NIFTY Next 50
9. Telecom Regulatory Authority of India
10. NIFTY 500
11. LYF
12. Reliance Industries
13. HDFC Bank
14. BluSmart
15. Infibeam
16. Bharti Airtel
17. Reliance Communications
18. Twitch (service)
19. Haptik
20. Payments bank