RBI approves Jio financial services’ conversion to core investment company
Jio Financial Services has received approval from the Reserve Bank of India (RBI) to transition from a Non-Banking Financial Company (NBFC) to a Core Investment Company (CIC).
In an official statement released on Thursday, the company said, “Further to the disclosure dated November 21, 2023, the Company has today received from the Reserve Bank of India approval for conversion of the Company from Non-Banking Financial Company to Core Investment Company.”
According to the RBI, a CIC is a specialized NBFC with a minimum asset size of Rs 100 crore. As per the RBI’s circular dated December 20, 2016, a CIC’s primary business is the acquisition of shares and securities under certain conditions. One of these conditions is that the CIC must hold at least 90 percent of its net assets in the form of investments in equity shares, preference shares, bonds, debentures, debt, or loans in group companies.
The transition from an NBFC to a CIC involves several significant changes in the company’s operational framework. As a Core Investment Company, Jio Financial Services will primarily focus on investments in and the management of its subsidiary companies. This change will enable the company to delineate the financials and operations of each subsidiary, offering better value discovery for investors.
Unlike typical NBFCs, CICs are non-deposit taking financial companies with assets predominantly invested in the equity shares, preference shares, or debt instruments of their group companies. As a CIC, Jio Financial Services gains greater operational flexibility, allowing it to focus on core investment activities without engaging in other financial services. CICs can explore different sectors and diversify their investment portfolios, adapting to changing market conditions.
