Jio Financial Services, the demerged entity of Reliance Industries, has applied to the Reserve Bank of India (RBI) for approval to convert from a Non-Banking Financial Company (NBFC) to a Core Investment Company (CIC). This move follows a regulatory mandate, and the company aims to alter its shareholding pattern and control post the demerger from Reliance Industries.
As per RBI guidelines, Core Investment Companies are entities predominantly investing in their group companies through equity, preference shares, convertibles bonds, or loans. These companies, categorized as passive holding entities, maintain control over their group companies without engaging in other financial activities.
Essentially, a CIC, defined as an NBFC, conducts the acquisition of shares and securities under certain conditions. Notably, it holds a minimum of 90 percent of its net assets in the form of investments in various financial instruments related to group companies.
Furthermore, a CIC refrains from trading its investments in group companies, except through block sales for dilution or disinvestment purposes. It restricts its financial activities to granting loans to group companies, issuing guarantees on behalf of group companies, and investing in bank deposits, money market instruments, government securities, and bonds or debentures issued by group companies.
Jio Financial Services denied reports of raising funds through bond issuance, refuting claims made by a Reuters report suggesting a potential fundraising of up to Rs 10,000 crore through bond issuance in the upcoming quarter, subject to regulatory approvals.
In the September quarter, the company witnessed a 101 percent sequential increase in net profit, while interest income experienced an 8.6 percent decline.
As of 9:43 AM, the stock was trading at Rs 221.25 on the NSE, marking a 0.48 percent increase from the previous close. Over the past month, the stock has risen by 2 percent, outperforming the 0.8 percent rise in the benchmark Sensex.
