Jio Finance is set to demerge from the Reliance Industries

After announcing its decision to foray into the business of financial services earlier this year, the management of Reliance Industries has officially decided upon July 20, 2023, as the formal date for the demerger of its financial arm.

Reliance Strategic Investments Limited (RSIL; the to-be-demerged entity) is a wholly-owned subsidiary of Reliance Industries. Post its demerger, it will be renamed to Jio Financial Services (JFS). This is the first major demerger in a long-time from the Mukesh Ambani-led Reliance Industries.

Details of the demerger

Shareholders of Reliance Industries will be entitled to one share of JFS for each share held in Reliance Industries.

Following the announcement of the record date, the share price of Reliance Industries has rallied. The company, already the highest-valued company in India, recorded a market capitalisation of over Rs 18.5 lakh crore on July 10, 2023.

The rationale behind the demerger

The Indian financial services industry has witnessed phenomenal growth over the years. Moreover, there is immense potential for further growth. Reliance Industries is keen on tapping into this growth through this demerger and establishing itself as one of the biggest NBFCs in India.

JFSL will highly benefit from the technological capabilities and huge cash reserves of Reliance Industries. Post demerger, JFSL plans to acquire liquid assets to meet the adequate regulatory requirements to start its lending business. It will majorly focus on the retail and MSME credit market segment. It also plans to incubate other financial services verticals such as insurance, digital payments, broking, and asset management.

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