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Jio Financial Services has applied to the Reserve Bank of India to convert into a core investment company from a non-banking financial company (NBFC), owing to a regulatory mandate.

The development is a part of a strategic restructuring post the firm’s demerger from Reliance Industries Limited (RIL). 

“This is to inform that as mandated by the RBI (while granting its approval for change in the shareholding pattern and control of the Company pursuant to the demerger of the Financial Services Business from Reliance Industries Limited into the Company), the company has submitted the application for conversion from NBFC to CIC,” Jio Financial Services said in an exchange filing. 

According to the RBI website, a core investment company is a specialised NBFC with an asset size of Rs 100 crore and above, carrying on the business of acquisition of shares and securities on conditions. 

One of the conditions says that the company does not hold less than 90% of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies. 

Further, it cannot trade in its investments in shares, bonds, debentures, debt, or loans in group companies except through block sale for the purpose of dilution or disinvestment. 

Core investment companies can accept public funds while not carrying out any other financial activity except granting loans to group companies, issuing guarantees on behalf of group companies and investments in bank deposits, money market instruments, government securities, and bonds or debentures issued by group companies.

‘No plans to raise funds’ 

In another exchange filing, Jio Financial Services dismissed reports on its plans to raise money via bond issuance. A Reuters report said that Jio Financial could raise up to Rs 10,000 crore through bond issuance. The company had gained 3% on the stock exchanges post the report, following which the regulator sought clarification.

“We wish to clarify that currently, the company has no plans to raise money by way of bond issuance or otherwise. The news item is speculative,” Jio Financial Services said.

Last week, the RBI approved the appointment of Isha Mukesh Ambani and two others as directors of the Reliance Industries’ NBFC firm.

Jio Financial Services, with a net worth of Rs 1.2 lakh crore, is one of the world’s highest-capitalised financial services platforms at inception. The company was listed on BSE and NSE in August this year.

The NBFC firm, in its first earnings report since carved out from RIL, said its net profit doubled quarter-on-quarter in the July-September period.

The consolidated net profit in the three months ended September 30 rose to Rs 668.18 crore compared to Rs 331.92 crore in the preceding quarter. The company’s revenue rose to Rs 608.04 crore against Rs 414.13 crore in the June quarter. This was partly helped by a dividend income of Rs 216.85 crore.