Reliance Industries Limited’s financial services subsidiary, Jio Financial Services, has secured approval from the Reserve Bank of India (RBI)
to convert from a non-banking financial company (NBFC) to a core investment company (CIC). This significant development was disclosed in a recent stock exchange filing.
Approval and Transition Process
In November, Jio Financial Services applied for the conversion to a CIC, following regulatory direction from the RBI.
This directive came after Jio Financial Services’ separation from Reliance Industries and a subsequent change in its shareholding pattern.
What is a Core Investment Company (CIC)?
A core investment company functions primarily as a holding entity that manages shares and securities of its group companies.
This shift allows Jio Financial Services to consolidate its various business verticals, including lending, asset management, and insurance, under distinct entities.
Unlike traditional NBFCs, Jio Financial Services’ subsidiaries operate independently, handling everything from payroll and insurance to asset management and lending.
This diverse operational model diverges from the typical framework set for pure-play NBFCs.
Regulatory Requirements for CICs
According to regulatory definitions, a CIC must possess assets exceeding Rs 100 crore. Moreover, it must allocate a minimum of 90% of its net assets in investments such as equity shares, preference shares, bonds, debentures, or loans within its group companies.
This structural alignment with the CIC model ensures compliance with regulatory frameworks, providing a streamlined operational structure for Jio Financial Services.
Market Performance and Listing
Following its separation from Reliance Industries, Jio Financial Services was listed on the stock exchanges in August 2023.
On July 12, the company’s stock opened at Rs 353.55 on the Bombay Stock Exchange, marking a gain from its previous closing price.
Throughout the trading day, it peaked at Rs 356.50, ultimately closing at Rs 350.35.
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