![Jio Financial Services Gets the RBI Approval to Convert from a NBFC to a Core Investment Company Jio Financial Services Gets the RBI Approval to Convert from a NBFC to a Core Investment Company](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhb5Iy-wNy93mODFfPLVA8jo2-31tZj0B9wE3aeNEa8mnAiL-6lySegCWUAxlYOiSS2EVXmrOCL9zRzGrp2bI5h9VYuCGsTcHtmlKtFjaxssu8fA6mPnkWDxQPMCvxczDd7Ry2kcsyp8Q-1VDI9jmgpUrdQyLaEk2uY7-Ewq3UBgAet9MYlGCPPeOCOgf0/s16000-rw/jio-financial-services-1693807831-1693925881609.webp)
The company informed the exchanges that it has received approval from the Reserve Bank of India for converting into a "Core Investment Company" from a "Non-Banking Financial Company" (NBFC). It was in November, last year, when Jio Financial Services had applied to the RBI to convert the company from an NBFC to a Core Investment Company. It had made this disclosure to the exchanges on November 21, 2023.
A CIC is a specialized NBFC with assets larger than ₹100 crore, primarily responsible for purchasing shares and securities subject to specific restrictions. At least 90% of a CIC's net assets must be invested in bonds, debentures, equity shares, preference shares, debt, or loans made to group firms.
As a CIC, Jio Financial Services will primarily focus on investments in shares, securities, and other financial instruments. At least 90% of its net assets must be invested in these areas.
CICs are subject to specific restrictions. For instance, they cannot engage in trading activities or provide loans to individuals or entities outside the group. The change allows Jio Financial Services to manage risk differently. As a CIC, it won't engage in regular lending or deposit-taking activities, reducing certain risks associated with traditional NBFCs.
CICs are typically part of a larger group of companies. Jio Financial Services will continue to be closely linked to the Reliance Industries group.
Jio Financial Services must adhere to RBI guidelines for CICs, ensuring compliance with capital adequacy norms and other regulatory requirements.
Besides Jio Financial Services, other companies that have made similar transitions from NBFCs to Core Investment Companies (CICs) in India. Reliance Capital, part of the Reliance Anil Dhirubhai Ambani Group (ADAG), underwent a similar transition. It shifted its focus from traditional NBFC activities to strategic investments as a CIC.
L&T Finance Holdings, a subsidiary of Larsen & Toubro, also made this transition. By becoming a CIC, it streamlined its operations and optimized its investment portfolio.
Bajaj Finserv, a prominent NBFC, diversified its business by converting into a CIC. This move allowed them to concentrate on group investments and strategic financial planning
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