Reliance AGM leaves Jio Financial Services investors wanting for more
Without divulging details, RIL Chairman Mukesh Ambani said that Jio Financial Services will foray into insurance segment including life, general and health, using predictive data analytics to co-create contextual products
Jio Financial Services (JFL) will foray into insurance segment including life, general and health, using predictive data analytics to co-create contextual products.
Image: Niharika Kulkarni/NurPhoto via Getty Images
Just as investors were waiting for more detailed business plans and prospects of Jio Financial Services at the annual general meeting (AGM) of Reliance Industries Limited (RIL), they were left wanting for more. Jio Financial Services, the recently demerged business entity of Reliance Industries, had made a stock markets debut on August 21 and since then has been looking for directions on its business growth, investment and expansion plans. [Disclaimer: Reliance Industries is the owner of the Network18 group, which publishes Forbes India].
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The company plans to increase financial services penetration by transforming and modernising them with a ‘digital-first’ approach that simplifies financial products, reduces cost of service, and expands reach through easily accessible digital channels.
“For tens of thousands of SMEs, merchants, and self-employed entrepreneurs, ease of doing business must mean ease in borrowing, investments, and payment solutions. JFS plans to democratise financial services for 1.42 billion Indians, giving them access to simple, affordable, innovative, and intuitive products and services,” Ambani said.
In the payments segment, Jio Financial Services will consolidate its payments infrastructure with offerings for both consumers and merchants. “JFS products will not just compete with current industry benchmarks but also explore path-breaking features such as blockchain-based platforms and central bank digital currency (CBDC). They will adhere to the highest standards of security, regulatory norms and ensure protection of customer transaction data at all times,” Ambani elaborated.
Also read: Jio Financial Services debuts at the stock exchanges: What's next?
He added that JFS is a highly capital-intensive business as RIL has provided JFS with a strong capital foundation. “Reliance has capitalised JFS with a net worth of Rs1,20,000 crore to create one of the world’s highest capitalised financial service platforms at inception,” Ambani said.
In July, the company has signed a joint venture agreement with BlackRock for launching asset management business in India.
“The convergence of rising affluence, favourable demographics, and digital transformation across industries is reshaping the market in incredible ways. We see growing financialisation, and a shift from unmanaged and physical assets to saving and investing, and we expect this to increase as per capita GDP continues to rise and technology advances digital inclusion,” Larry Fink, chairman and CEO, BlackRock, said in his address.
Also read: Explained: The Listing Dynamics of Jio Financial
According to analysts at Kotak Institutional Equities, JFS’s businesses will likely leverage the strengths of the group—technology-first approach underpinned by group tech capabilities, Jio’s reach, relationships with vendors and individual customers and on tapping borrowers who access high-interest informal channels.
Shares of JFS has been on a downward spiral, however. On Monday, the stock closed at Rs211.65, down Rs0.60, or 0.28 percent, on the Bombay Stock Exchange (BSE). Shares of Jio Financial Services declined nearly 20 percent from its listing price of Rs265.
The stock was maintained in both the indices BSE and National Stock Exchange (NSE) at a constant price of Rs261.8 per share, which is the difference between closing price on July 19 and open price discovered during the special pre-open session (SPOS) on July 20.
