New Delhi (The Hawk): At its meeting on Friday, Reliance Industries Limited's (RIL) Board of Directors agreed a scheme of arrangement between RIL, Reliance Strategic Investments Limited (RSIL), and their respective shareholders and creditors, under which RIL will demerge its financial services enterprise into RSIL (to be renamed Jio Financial Services Limited or JFSL).
JFSL will be traded on Indian stock exchanges. RSIL is a wholly-owned subsidiary of RIL and a non-deposit taking systemically important (ND-SI) non-banking financial firm registered with the RBI (NBFC).
According to the scheme, RIL shareholders will get one equity share of JFSL with a face value of Rs 10 in exchange for one fully paid-up equity share of Rs 10 in RIL.
Based on the recommendations of the independent valuer and merchant bankers, the Board authorised the entitlement ratio.
RIL's interest in Reliance Industrial Investments and Holdings Limited (RIIHL), which is part of RIL's financial services venture, would be transferred to JFSL. Through its holdings in Petroleum Trust and Reliance Services and Holdings Limited, RIIHL is the ultimate beneficiary of 6.1% of RIL shares.
Furthermore, JFSL will acquire liquid assets to: a) provide adequate regulatory capital for lending to consumers, merchants, and others; and b) incubate other financial services verticals such as insurance, payments, digital broking, and asset management for at least the next three years of business operations.
The key enterprises have regulatory licences in place.
The Indian financial services sector is poised to undergo a digital transition, thanks to secular growth drivers. The sector represents a vast, underserved, and expanding addressable market, particularly for retail and small-business product categories.
JFSL and its subsidiaries (JFS) will use Reliance's technology capabilities and focus on digital financial product delivery to democratise financial services access for 1.4 billion Indians.
Through different digital applications, Reliance has been establishing and fostering a thriving digital led-financial services platform. In their respective categories, Reliance has created best-in-class applications with strong consumer engagement metrics and differentiated value propositions. More than 20 million users are now served by the present footprint.
JFS intends to create consumer and merchant lending businesses based on proprietary data analytics, which will complement and supplement traditional credit bureau-based underwriting. JFS will continue to assess organic development, joint ventures, and inorganic prospects in the insurance, asset management, and digital broking categories.
JFS will construct a large-scale business across appealing customer categories in order to produce value for all stakeholders. This, combined with JFS's strong capital foundation and unrivalled digital infrastructure capabilities, would allow it to provide a differentiated value offering to its customers.
JFS will also hire an experienced management team and implement best-in-class governance and risk management procedures across verticals to establish itself as one of India's premier financial services companies.
(Inputs from Agencies)
