New Delhi [India], July 12 : Jio Financial Services has received the nod from the Reserve Bank of India (RBI) to convert into a Core Investment Company (CIC) from a Non-Banking Financial Company (NBFC).
The company in an official statement on Thursday stated that "Further to the disclosure dated November 21, 2023, the Company has today received from the Reserve Bank of India approval for conversion of the Company from Non-Banking Financial Company to Core Investment Company."
According to the Reserve Bank of India, a CIC is a specialised NBFC with an minimum asset size of Rs 100 crore. The RBI's circular dated December 20, 2016 stated that, a CIC's main business is the acquisition of shares and securities with certain conditions.
One of the conditions stipulated by the central bank is that the CIC holds not less than 90 percent of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies.
The transition from an NBFC to a CIC involves several key changes in the company's operational framework. As a Core Investment Company, Jio Financial Services will primarily focus on investments in and the management of its subsidiaries companies.
The transformation to a CIC structure would enable Jio Financial Services to delineate the financials and operations of each subsidiary, to provide better value discovery for investors.
Unlike typical NBFCs, CICs are non-deposit taking financial companies that have their assets predominantly invested in the equity shares, preference shares, or debt instruments of their group companies.
As a CIC, the company gains greater operational flexibility. It can now focus on core investment activities without engaging in other financial services.
The CICs can explore different sectors and diversify their investment portfolio. This flexibility allows them to adapt to changing market conditions.
The shares of the company also surged more than 1.5 per cent during the opening session on Friday, and stands at Rs 353.25 at the time of filing this report.
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