New Delhi: The Board of Directors of Reliance Industries Limited (RIL), at its meeting held on Friday, approved a scheme of arrangement among RIL, Reliance Strategic Investments Limited (RSIL) and their respective shareholders and creditors in terms of which, RIL will demerge its financial services undertaking into RSIL (to be renamed Jio Financial Services Limited or JFSL).
JFSL would be listed on the Indian stock exchanges. RSIL is currently a wholly-owned subsidiary of RIL and is an RBI-registered non-deposit taking systemically important (ND-SI) non-banking financial company (NBFC).
Pursuant to the scheme, shareholders of RIL will receive one equity share of JFSL of face value of Rs 10 for one fully paid-up equity share of Rs 10 held in RIL.
The Board has approved the entitlement ratio based on the recommendations of the independent valuer and merchant bankers.
The investment of RIL in Reliance Industrial Investments and Holdings Limited (RIIHL), which is a part of the financial services undertaking of RIL, will stand transferred to JFSL. RIIHL is the ultimate beneficiary of 6.1 per cent RIL shares through its interest in Petroleum Trust and Reliance Services and Holdings Limited.
Additionally, through the scheme, JFSL will acquire liquid assets to a) provide adequate regulatory capital for lending to consumers, merchants, etc; b) incubate other financial services verticals such as insurance, payments, digital broking, asset management for at least the next three years of business operations.
The regulatory licences for the key businesses are in place.
With secular growth drivers, the Indian financial services sector is poised to undergo a digital transformation. The sector presents a large, under-penetrated and growing addressable market, especially for retail and small-business-focused product categories.
JFSL and its subsidiaries (JFS) will leverage the technology capability of Reliance and focus on digital delivery of financial products to democratise financial services access for 1.4 billion Indians.
Reliance has been developing and fostering a vibrant digital led-financial services platform through various digital applications. Reliance has developed best-in class applications having high customer engagement metrics and differentiated value propositions in their respective categories. The current footprint touches more than 20 million consumers.
JFS plans to launch consumer and merchant lending business based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting. JFS will continue to evaluate organic growth, joint-venture partnerships as well as inorganic opportunities in insurance, asset management and digital broking segments.
JFS will build a business of scale across attractive consumer segments to create value for every stakeholder. This coupled with a strong capital base and unparalleled digital infrastructure capabilities would enable JFS to offer a differentiated value proposition for its customers.
JFS will also onboard an experienced management team and adopt best-in-class governance and risk management practices across verticals to create one of India’s leading financial services enterprise.