JFS to branch off of Reliance to offer financial services plus telecom

Indian conglomerate Reliance will spin off and list its financial services, a move that it said will allow the oil-to-telecom giant to enter and expand into financial services such as consumer and merchant lending business and also build fintech for “all Indians.”

Reliance Industries, run by billionaire Mukesh Ambani, said in a statement that it will be incubating, acquiring and inking joint ventures in the new unit, which is called Jio Financial Services, to broaden its offerings to add insurance, payments, digital broking and asset management.

It plans to offer lending based on proprietary data analytics to complement and supplement the traditional credit bureau-based underwriting. The company already does some lending through its wholesale business to merchants and to consumers through its retail stores.

Reliance Industries, which clocks a consolidated revenue of over $100 billion, operates the nation’s largest telecom network with over 420 million subscribers and runs the country’s largest retail chain with over 16,000 stores.

A fintech executive, who requested anonymity speaking about an adjacent business, said Reliance could hypothetically use its brand name to raise capital at some of the lowest cost in the country and then disburse loans and make good profits. If so, the executive said, Jio Financial Services can become a headache to firms like Tata Capital and Bajaj Finance.

“JFS will be a truly transformational, customer centric and digital-first financial services enterprise offering simple, affordable, innovative and intuitive financial services products to all Indians,” said Ambani in a statement late Friday.

“JFS will be a technology-led business, delivering financial products digitally by leveraging the nation-wide omni-channel presence of Reliance’s consumer businesses. JFS is uniquely positioned to capture multiple growth opportunities in financial services bringing millions of Indians into formal financial institutions.”

Every Reliance shareholder will get one share of the new firm for each share they held in the parent firm, the company said. The company didn’t say how soon it will be listing Jio Financial.