Reliance's financial services business demerger approved

Reliance's financial services business demerger approved: the new company will be named Jio Financial Services, and companies like Paytm will get competition

May 4, 2023 - 20:13
 0
Reliance's financial services business demerger approved

Reliance Industries Limited i.e. RIL's Financial Services Business is going to be demerged. The demerger of Reliance Industries and Reliance Strategic Investments (RSIL) has received the approval of creditors and shareholders. The demerger will be done through a share-swap arrangement.
In a regulatory filing, RIL said 99.9994% of unsecured creditors and equity shareholders voted in favour of the demerger. Talking about secured creditors, 100% of the creditors voted in favour. Post demerger, Reliance Strategic Investments will be renamed Jio Financial Services Limited.
The new company may be listed on the stock exchange by October. Shareholders of RIL will get one share of Jio Financial Services for every share they hold. Last year, Reliance Industries announced plans to separate its financial services business into a separate entity and subsequently list it on the stock exchanges.
The turnover of the financial services business as on March 31, 2022, was Rs 1,387 crore. And KV Kamath will be the non-executive chairman of the new company. Market watchers believe that the decision is positive for existing shareholders and could lead to disruption of the NBFC segment from FY25.
Jio Financial Services plans to start a consumer and merchant lending business. Global financial services giant Macquarie in its report last year termed Reliance's financial services business as a major threat to Paytm and other fintech companies in terms of market growth.
Jio Financial Services will stand out from most fintech because it has access to massive amounts of data. Jio can process and analyze this data in real time to offer financial services like Alibaba, Amazon, and Apple.
After the demerger, Jio Financial Services could become the fifth-largest financial services company in the country. Reliance Industries already has an NBFC license, which can be leveraged for consumer or merchant lending.
Reliance's financial services business includes Reliance Industrial Investments and Holdings Limited, Reliance Payment Solutions Limited; Jio Payments Bank Limited; Reliance Retail Finance Limited; Geo-Information Aggregator Services Limited; and is an investment in Reliance Retail Insurance Broking Limited.

Muskan Kumawat Journalist & Writer