Jio Financial Services Reports Record Second-Quarter Profits and Plans to Transform India’s Financial Landscape

Mumbai: Reliance Industries Ltd-backed Jio Financial Services recorded a net profit of 668.2 crore on Monday, more than tripling from the previous quarter due to higher income from operations.

This is the company’s first financial result after it went public on the stock exchanges on August 21. Jio Financial Services intends to enter consumer finance, asset management, and insurance following the demerger of Reliance Industries’ financial services company.

In the September quarter, the company’s total revenues were 608 crore, increasing 47% from the previous quarter. While interest income was lower in Q2 than in Q1, dividend income of 217 crore in the September quarter helped to boost total revenues.

Total expenses increased 33% quarter on quarter to 71 crore, mostly due to rising staff expenses. The corporation has begun to assemble a management team. Indeed, at Reliance’s virtual annual general meeting in August, chairman and managing director Mukesh Ambani stated that a “highly motivated leadership team is being built with a combination of financial industry experts and young leaders who are eager to take on big challenges.”

Jio Financial announced the appointment of AR Ganesh, a former ICICI Bank executive, as group chief technology officer on Monday. Ganesh has been with ICICI Bank for 13 years, most recently as the chief information security officer (CISO) with responsibility for cybersecurity.

Meanwhile, the company stated that it is a non-deposit taking systemically important non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI).

According to the notes to accounts issued on Monday, the RBI had directed the company to meet the eligibility criteria for a core investment company and apply for conversion to NBFC-CIC while granting its approval for change in the shareholding pattern and control of the company under the demerger scheme. According to the RBI, this must happen within six months of the scheme becoming operational or three months of the equity shares being listed, whichever comes first.

“The holding company (Jio Financial Services) is in the process of filling for the same,” the statement stated.

According to the RBI, a core investment company is an NBFC that acquires shares and securities and has at least 90% of its net assets invested in group firms in the form of equity shares, preference shares, bonds, debentures, debt, or loans.

Although many expect Jio Financial to disrupt the financial services industry, some say it will be difficult to match its previous success in the telecom sector. Given that the financial services industry is more strictly regulated and that established firms such as banks, non-banks, and insurance companies have built on-the-ground presence over time, there is plenty of competition.

Mukesh Ambani stated in August that ease of doing business must include simplicity of borrowing, investments, and payment solutions for tens of thousands of small firms, traders, and self-employed entrepreneurs. He stated that Jio Financial Services intends to democratize financial services for 1.42 billion Indians by providing them with easy, affordable, innovative, and intuitive products and services.