Jio Financial Services has applied to the Reserve Bank of India (RBI) for conversion of the company from a non-banking financial company (NBFC) to a core investment company (CIC) in compliance with regulatory directives. The company announced the submission of the application for the conversion via an exchange filing. The company also informed that this move of theirs is in line with the RBI mandate and is part of the company’s restructuring following its demerger from Reliance Industries.
“This is to inform that as mandated by the Reserve Bank of India (while granting its approval for change in the shareholding pattern and control of the Company pursuant to the demerger of the Financial Services Business from Reliance Industries Limited into the Company), the Company has submitted the application for conversion of the Company from NBFC to CIC,” Jio Financial Services said in the filing.
According to a report by Moneycontrol, As per RBI guidelines, CICs are entities primarily investing their assets in group companies, whether through equity, preference shares, convertible bonds, or loans. These entities serve as passive holding companies, maintaining control over their group companies without engaging in other financial activities.
Essentially, a CIC, defined as an NBFC, conducts the business of acquiring shares and securities under specific conditions. These include holding no less than 90 percent of its net assets in the form of investments in various financial instruments related to group companies.
Additionally, it refrains from trading its investments except through block sales for dilution or disinvestment purposes. The CIC is restricted from participating in any financial activity beyond providing loans to group companies, issuing guarantees, and investing in specific financial instruments.