Reliance Industries is looking to foray into the insurance business. Days after announcing the demerger of its financial services business, which is set to be renamed as Jio Financial Services Limited (JFSL), sources in the know say the company is in the final stages of filing its application to the insurance regulator for life and general insurance businesses. “Two companies are being set up to pursue each of these businesses and separate licenses will be sought by them,” the source said.
Reliance to list financial services arm; to be named Jio Financial ServicesPursuant to the scheme, shareholders of RIL will receive one equity share of JFSL of face value ₹10 for one fully paid-up equity share of ₹10 held in RIL
The insurance verticals are set to be established on a capital base of ₹1,000 crore each. According to IRDAI norms, the minimum paid-up capital for life and general insurance businesses are ₹100 crore each. An e-mail sent to RIL remained unanswered till press time.
“While the process for demerger of the financial services business has not formally started yet, the plan is to keep all the licenses ready so that the company can be ready for operations from Day 1 of its operations,” said another highly placed source. Also, if Jio Financial decides to pursue inorganic opportunities in the insurance space, having a license of its own could help the company. “IRDAI is keen that the existing life and general insurance companies should not be seen as license targets. So, in case of mergers and acquisitions, preference is given to those who already have license to operate the business,” said the source.
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On October 21, the board of Reliance Industries Limited approved the demerger of its financial services undertaking to Reliance Strategic Investments Limited (RSIL). Post demerger, RSIL will be renamed as Jio Financial Services which will get listed in the bourses. Shareholders of RIL will get one equity share of JFSL.
RSIL is an RBI registered non-deposit taking non-banking financial services company (NBFC). JFSL will focus on deepening its lending business. The company will also engage in other financial services verticals such as insurance, payments, digital broking, asset management, according to RIL’s press statement dated October 21.