Reliance Industries on October 21 announced the demerger of its financial services business into a separate entity. The financial services business, currently under Reliance Strategic Investments Limited (RSIL), will be demerged and renamed Jio Financial Services Limited (JFS).

JFSL would be listed on the Indian stock exchanges, the company said. As of March 31, 2022, the turnover of the financial services business stood at Rs 1,387 crore or 0.3% of the total turnover of Reliance.

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Reliance Strategic Investments is a wholly-owned subsidiary of RIL. It is a Reserve Bank of India-registered non-deposit-taking systemically important (ND-SI) non-banking financial company (NBFC).

Shareholders of Reliance Industries will receive one equity share of Jio Financial Services at a face value of Rs 10 for one fully paid-up equity share of Rs 10 held in RIL.

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The investment of RIL in Reliance Industrial Investments and Holdings Limited (RIIHL), which is a part of the financial services undertaking of Reliance Industries, will stand transferred to JFSL. The RIIHL is the ultimate beneficiary of 6.1% RIL shares through its interest in Petroleum Trust and Reliance Services and Holdings Limited, the company said.

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RIL said through the demerger scheme, Jio Financial Services will acquire liquid assets to provide regulatory capital for lending to customers, and merchants and incubate other financial verticals such as insurance, payments, digital broking, and asset management for at least the next three years of business operations. The regulatory licenses for the main businesses are in place, the company said in a statement.

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Reliance said Jio Financial Services and its subsidiaries will focus on the digital delivery of financial products to democratize financial services access for India’s 1.4 billion population. The company aims to launch a consumer and merchant lending business based on proprietary data analytics to complement and supplement traditional credit bureau-based underwriting.

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Currently, the financial services business has a base of more than 20 million consumers, the company said.

Citi, Morgan Stanley and Goldman Sachs are acting as financial advisors. Khaitan & Co is acting as legal advisors for the proposed transaction.