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Jio Financial Services(JFS) Business Model

Jio Financial Services (JFS) is a financial services company that was demerged from Reliance Industries Limited (RIL) in 2022. JFS business model is providing a range of financial services to consumers and businesses in India.

JFS services

Lending service to consumers : Jio Financial Services offers loans to consumers to purchase consumer durable goods such as televisions, refrigerators, mobiles.

Lending service to merchants : Jio Financial Services also offers loans to retail merchants to finance their inventory and working capital required for daily needs.

Business loans to SMEs: Jio Financial Services offers loans to small businesses to finance their business expense and growth needs.

Upcoming finance sector : JFS is planning disrupt Mutual fund, Insurance and Lending as well same again like Telecommunication and OTT Services

These products and services allow consumers and businesses to make payments, transfer money, and access financial services digitally.

Jio Financial Services business uses of their own technology platform and partnerships to deliver financial services to customers in a more efficient way. These way JFS inhancing the digital financial experience.

Jio Financial Services is targeting a large number of audience and also growing market of India. The country’s financial services sector is expected to grow at CAGR of 12% over the next 5 years. Jio Financial Services is well-positioned to capitalise on this growth, given its strong parent company, its large customer base, and its focus on technology.

Jio Financial Services is very scalable business and can expand its reach by partnering with own exiting business like reliance retail and online jio customer.

Jio Financial Services is new company, but it has the potential to be a major player in the Indian financial services sector. The company has three big factor Affordability Digital solution and it’s technology will be able to capture the market and succeed.

New sector of jio financial Slservices

Reliance industry is once again on the brink of transformation from revolutionizing same before in telecom industry with Jio, to reshaping the entertainment landscape with Jio Cinema. Now set it’s own height on the financial and mutual fund sector.

Jio Financial Services and how it’s poised to redefine the future of the mutual fund industry. Prepare to witness a potential game-changer that could send shockwaves to companies like Bajaj Finserv Ltd and Bajaj Finance Ltd.

It’s the strategic move by Jio Financial Services and how BlackRock, one of the world’s largest asset management companies, is collaborating with Jio Financial Services to bring affordable and innovative investment solutions to millions of Indian investors.

Mukesh Ambani is keeping his plans under wraps, leaving us guessing about the exact nature of Jio Financial Services offerings. Will it venture into mutual funds, insurance, lending or something entirely unexpected?

People think that reliance demerge telecommunication sector but now take big decision on financial sector. When reliance separate entity jio Financial Services itself valued 1.66 lakh crore.

Company one by one separate entity and make it big. With this decision jio Financial Services came under top 50 company list. It became 8th largest Company in finance sector and 3rd largest in non banking finance sector.

Key companies under Jio Financial Services

Which sector will target jio finance services.

According to sources Reliance try to disrupt the Mutual fund sector, insurance sector and lending sector also.We knew that how jio is capturing online customer and reliance retail capturing offline customer and this is pre-planned strategy helps further in financial sector.

Jio finance services partnered with BlackRock company each Company investef 150 million dollar to expand in asset management business. We all know that BlackRock is biggest asset management company in the world and reliance want to capture available this big opportunity in India.

Why entering in mutual fund sector?Now mutual fund industry manage around 44 lakh crore. More important thing that it is grow CAGR with more than 20%.in 2013 it manage 8 lakh crore only.

According to the report of Edelweiss in 2022, only 9.7 % people invest in mutual fund. Invest in the aspect like real estate, lending, insurance etc.

Today 6.65 cr people invest in SIP it’s average value around 1100 cr means monthly average investment ia 2200 rupee.

Today more than 44 company registered in financial sector like PSU, Private bank, NBFC, Digital platform like Paytm, Zerodha etc. Out of 44, top 10 company manage 80% of wealth.

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Hey, I am Nehal patel an engineer by profession and intrepreneur by passion, and founder of BusinessBlast. BusinessBlast is works on business ideas, marketing techniques, product development and much more.

Mukesh Ambani's Ambitious Gamble: Jio Financial Services' Potential to Redefine Finance in India

Nadeesh Kareemdathil , Apoorva Bajj

"Jio" stands as a well-known and widely recognized name in Indian households. The entrance of Reliance Industries, India's largest conglomerate, into the telecom sector in 2015 is likely etched in your memory. Their groundbreaking approach of offering "Free Internet" marked their foray into the fiercely competitive telecom market. In just eight years, they reshaped the industry landscape by sidelining smaller players and emerging as the dominant market leader. Presently, Reliance Industries is embarking on its next significant venture – disrupting the financial services sector. This move is evident with the listing of Jio Financial Services , following its demerger from Reliance Industries on July 20, 2023. With the launch of Jio Financial Services (JFS), Ambani aims to address the financial inclusion gap in the country and offer a comprehensive suite of financial products and services to millions of underserved and unbanked individuals.

Understanding the Landscape: The Need for Financial Inclusion in India Jio Financial Services: A Multi-Pronged Approach Jio Financial Services' Vision Potential Impact and Challenges A Vision with the Potential to Transform India

Understanding the Landscape: The Need for Financial Inclusion in India

Despite significant economic progress, India faces a significant challenge in financial inclusion. Millions of citizens, particularly in rural areas, lack access to basic financial services like bank accounts, insurance, and credit. This lack of access hinders their ability to manage their finances, build wealth, and participate fully in the formal economy.

Jio Financial Services: A Multi-Pronged Approach

JFS aims to address this challenge by offering a comprehensive suite of financial products and services delivered through a robust digital platform and a vast network of physical touchpoints. Key elements of the JFS strategy include:

• Leveraging the Jio Ecosystem : JFS benefits from the extensive reach and infrastructure of the Jio network , connecting to over 400 million mobile subscribers across India. This allows for seamless digital access to financial services through the Jio app and other Reliance platforms .
• Partnerships and Collaborations : JFS strategically partners with established financial institutions like SBI Life, Kotak Mahindra Bank, and HDFC Bank . This collaboration allows JFS to offer a wider range of products and leverage the expertise of these partners.
• Focus on Microfinance and Insurance : JFS prioritizes microfinance products like loans and savings accounts, catering to the specific needs of small businesses and low-income individuals. Additionally, JFS offers affordable insurance products, providing much-needed financial protection to vulnerable populations.
• Financial Literacy and Education : JFS recognizes the importance of financial literacy and education. They conduct workshops and awareness campaigns to empower individuals to make informed financial decisions.

Jio Financial Services' Vision

Mukesh Ambani harbored aspirations to venture into the financial services sector, a plan set into motion when the company applied for a payments bank license in 2015. This license was secured just a year before the launch of Jio's telecom services.

The demerger of Jio Financial Services is anticipated to unlock value for investors, marking the company's foray into various financial avenues, including loans, asset management, insurance, and more. A significant step towards this vision is the partnership with Blackrock , with both entities investing $150 billion each for entering the asset management sector. Additionally, during the 46th Annual General Meeting (AGM) of Reliance Industries Ltd, it was revealed that Jio Financial Services Ltd would extend its footprint into the insurance industry through collaborations with potential global players.

The company envisions providing widespread financial solutions to both consumers and merchants, facilitating digital adaptation through technologies such as blockchain-based platforms and RBI's Central Bank Digital Currency (CBDC).

The motivation behind Reliance's venture into the financial services sector is rooted in the promising and dynamic outlook of India's financial landscape. The industry has demonstrated robust growth, evidenced by a commendable Compound Annual Growth Rate (CAGR) of 14% in market capitalization on the National Stock Exchange (NSE) and the Bombay Stock Exchanges (BSE) from March 2017 to March 2023. This growth is further reflected in the increased number of listed shares, surging from 4,613 to 6,466 during the same period.

The proliferation of demat accounts is noteworthy, experiencing substantial growth from 27.85 million to 114.50 million between March 2017 and March 2023, at an impressive CAGR of 26.57%. This surge underscores retail investors' heightened interest and active participation in the stock market.

The mutual fund landscape also exhibits remarkable expansion, with Assets Under Management (AUM) soaring from ₹17,456 billion in March 2017 to ₹39,420 billion in March 2023, showcasing a significant 14% CAGR. The growth in mutual fund investments, particularly through Systematic Investment Plans (SIP), has been noteworthy, with SIP contributions rising at a commendable 24% CAGR from ₹439 billion to ₹1,560 billion between March 2017 and March 2023. This trend signifies a robust culture of regular and disciplined investment, further reinforcing the stability of the financial services sector.

Potential Impact and Challenges

JFS has the potential to revolutionize the Indian financial landscape by:

• Expanding Financial Inclusion : By providing easy access to financial services through a vast network and digital platform , JFS can bring millions of unbanked individuals into the formal financial system.
• Promoting Financial Literacy : JFS's focus on financial education can empower individuals to manage their finances more effectively and make informed decisions.
• Driving Economic Growth : Increased financial inclusion can lead to higher savings, investments, and entrepreneurial activity, boosting the overall economy . However, JFS also faces challenges:
• Competition : The Indian financial services sector is already crowded with established players. JFS needs to differentiate itself and compete effectively.
• Regulatory Hurdles : Navigating complex financial regulations can be challenging for a new entrant.
• Data Privacy and Security : Building trust with consumers and ensuring data security is crucial in the digital financial space.

A Vision with the Potential to Transform India

Jio Financial Services represents Mukesh Ambani's ambitious vision to transform the Indian financial landscape. By leveraging technology, partnerships, and a focus on financial inclusion, JFS has the potential to empower millions of individuals and contribute significantly to India's economic growth . However, navigating the competitive landscape and regulatory hurdles will be critical for JFS to achieve its full potential. The success of JFS will be closely watched, as it holds the potential to redefine the way financial services are delivered in India and empower millions to achieve financial security and prosperity.

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Will Jio Fin follow the retail, telecom model and disrupt the financial services sector?

• Market is not rushing to downgrade Jio Fin rivals just yet, despite its deep pockets and ability to disrupt.
• Jio Fin’s aggression in the unsecured loan business will decide how badly rivals will be impacted in times to come.
• Given that cost of funds for JFS is expected to be significantly lower than other NBFCs, it can price its offerings much better than rivals in consumer finance.

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All eyes on jio financial services in the upcoming reliance industries limited agm.

Reliance Industries Limited will hold its annual general meeting (AGM) on August 28, where Chairman Mukesh Ambani is expected to make key announcements regarding the company's growth and expansion plans. The focus will be on Jio Financial Services (JFS), which recently listed on the stock exchanges. Ambani is likely to share growth plans for JFS, including its entry into the B2B credit business and expansion into insurance, payments, digital broking, and asset management.

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In charts: Jio Financial Services’ promise of the future

• In the financial services space, the ₹ 1.55-trillion valuation of newly-listed Jio Financial Services value is less about what it has done so far and more about what it promises to do.

The Mukesh Ambani-led Reliance Group likes to do everything big, from announcement to business scale. In the past 15 years, its diversification from energy has seen it take this route in retail, telecom and, increasingly, media. Next up is financial services. On 21 August, it spun off from its parent (Reliance Industries) a company housing a bouquet of financial services businesses. On 1 September, the stock market valued it at ₹ 1.55 trillion, making it the third-most valuable in its space. In the financial services space, this value is less about what it has done so far and more about what it promises. Those two different prisms partly explain the volatility the stock has seen since its listing.

Reliance Industries first announced the demerger of Jio Financial Services from itself in late-2022. This July, it spun off the financial services businesses under the Jio brand—used in telecom and media—into a separate company. Ultimately, six other Reliance subsidiaries were housed in a company, Reliance Strategic Investments, which was renamed to Jio Financial Services (JFS).

As of 31 March, JFS had assets of ₹ 1.15 trillion and was registered with the Reserve Bank of India as a non-banking finance company (NBFC). A large part of this asset base was from shares held by it of subsidiaries, associate companies and joint ventures. In 2022-23, JFS’ consolidated revenues amounted to ₹ 1,635 crore, a fraction of leading NBFCs. Yet, it is already ranked third in terms of market cap, stemming from its other Reliance holdings and the promise in financial services.

Range of businesses

While it is unclear as to which businesses in the financial service space JFS will eventually get into, the subsidiaries it houses are startups in sectors as diverse as payment aggregation, retail finance and insurance broking. It also has a tie-up to enter the fund management business with BlackRock, the world’s largest asset manager, and news reports say the group is likely to enter the insurance business too.

It is ranked third in terms of market capitalization among listed diversified NBFCs (which, like Jio Financial, are in multiple financial services businesses). Its price-to-book value—a measure of how it is valued with respect to its assets—is still well below its peers. That doesn’t necessarily amount to under-valuation. Its valuations will be driven by its investments in Reliance entities and growth in the various financial services businesses. Eventually, the latter has to pull the valuations.

Future potential

For now, the promise of financial services apart, the ₹ 1.55-trillion valuation of Jio Financial Services is principally the value of its holdings in associate and joint venture companies belonging to the Reliance Group. For example, of the ₹ 1.15 trillion of assets on its consolidated balance sheet, its investment in the Petroleum Trust is worth about ₹ 60,000 crore.

Of the balance, and excluding adjustments due to the restructuring of corporate cross-holdings due to the demerger of JFS from RIL, a major chunk of assets comprises investments in subsidiaries. This is either held by the parent company (Reliance Strategic Investments, subsequently renamed to JFS). Or, it is held by a subsidiary, Reliance Industrial Investments and Holdings (RIIH), which has large investments in other Reliance associate companies. The bulk of JFS’s net profit in 2022-23 came from the ₹ 152 crore profit reported by RIIH.

Diversification strategy

Going forward, the focus of JFS’ valuation will be its financial services business. NBFCs operate in various business lines like housing loans, gold loans and corporate loans. Some of the largest NBFCs such as Bajaj Finance and Cholamandalam are so-called ‘diversified’ NBFCs, cutting across categories. Diversified NBFCs command higher valuations than niche ones. According to a recent BCG report, profits of the NBFC sector as a whole rose 39% in 2022-23, driven by a 68% increase in profits of diversified NBFCs and a 220% increase in profits of microfinance NBFCs. These two also drove overall credit growth in the sector. While gold loan NBFCs account for the highest return on assets, they account for just 4% of loans. In contrast, home loan NBFCs account for 53% of loans, followed by diversified NBFCs (41%). Which spaces JFS occupies will be watched.

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• Outlook 2024: How will Jio Financial Services fare this year?

JFS is among the world's highest-capitalised financial services platforms, which provides financial support for a competitive edge in a fintech market where startups often face funding challenges.

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Jio Financial shares: What CLSA says on JFS future plans

Life insurance is a long-term product with cash flow of both premiums and claims spanning many years. in addition, this is a heavily regulated industry..

• Updated Aug 21, 2023, 12:37 PM IST

• JFS reportedly has plans to apply for life and non-life insurance licences.
• Jio’s entry point could be corporate-relationship-driven segments such as group health.
• CLSA said it would be interesting to see the impact JFS can make on pricing in the industry.

Foreign brokerage CLSA, while citing media reports of Jio Financial Services Ltd (JFS) entering into life and general insurance space, said covering more lives could be a key focus area for the demerged entity of Reliance Industries Ltd. In its latest research note on Monday, CLSA said insurance distribution may present an opportunity as it remains a fragmented segment with the presence of few large players only, adding that JFS already has a broking business in place with over 17 insurance partners, which may help JFS scale up faster.

JFS reportedly has plans to apply for life and non-life insurance licenses. CLSA cited media reports suggesting the company has set aside a capital base of Rs 1,000 crore each for the businesses. It cited another media article that suggested JFS has started hiring for both companies with a few former PSU officers joining JFS.

There are over 55 players in India’s insurance sector, out of which 26 are life insurers and 31 general insurers (including five standalone health insurers). Total premiums written in FY23 by Indian life insurer was $98 billion and general insurers was at $32 billion.

Life insurance is a long-term product with cash flow of both premiums and claims spanning many years. In addition, this is a heavily regulated industry with various norms around products and investments, it said, JFS has the ability to raise awareness for insurance as an investment product in deeper/wider geographies along with better pricing to improve protection penetration. CLSA said it would be interesting to see the impact JFS can make on pricing in the industry.

Watch: Jio Financial shares hit lower circuit on listing day; know share price, symbol, valuation, capital gains tax, and more

"We estimate that an Rs 1,000 crore net worth could a imply sum assured of about Rs 1,20,000 crore-Rs 1,80,000 crore, assuming 2.5 times-1.5 times solvency ratios. In comparison, SBI Life has a sum assured of Rs 18 lakh crore as of March 2023," CLSA said.

In the general insurance space, the insurance industry is made of up of unique subsectors, each having a business model quite distinct from the other. Motor is a highly competitive segment and has been low hanging fruit or an entry point for many new general insurers, CLSA said adding that health insurance is a compounding growth story with competition incrementally rising but is an intensive business that takes time to scale. The commercial segment is a reinsurer dependent large ticket segment that is driven by corporate relationships, the foreign brokerage said.

Also read: Hot stocks on August 21, 2023: Reliance Industries, PNB Housing, Jio Financial, SJS Enterprises and more

"We believe Jio’s entry point could be corporate-relationship-driven segments such as group health and commercial insurance. We estimate that an Rs 1,000 crore net-worth implies a gross premium size of about Rs 2,500-Rs 3,500 crore. Assuming 2.2-1.5 times solvency ratios. This is about 1/10th of ICICI Lombard’s FY23 premiums," CLSA said.

CLSA also talked about Reliance Retail Insurance Broking, which was established in 2006 and recently renamed to Jio Retail Insurance Broking.

"The company had a net worth of Rs 3.3 crore with net profit of Rs 16 crore in FY23. Assuming a normalised take rate we estimate the company has sold +Rs 300 crore of premiums versus Rs7000 crore in premiums sold by PB Fintech in FY22. We do not have any detail on Jio’s plans regarding its broking business. However, its existent partnerships with 17 insurers means this business could be scaled up faster under Jio Financial Services," it said.

Also read: Titan shares: Caratlane stake purchase EPS dilutive in near term. Stock price targets & more

Also read: JFS shares list at Rs 265 on BSE; m-cap stands at Rs 1.68 lakh crore

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Jio Financial, BlackRock to tap India’s wealth management market

Jio Financial Services, part of the Indian conglomerate Reliance, is forming a joint venture with U.S. asset manager BlackRock to set up a wealth management and broking business in India, the two firms said Monday.

The announcement follows BlackRock and Jio Financial launching a joint venture last year to offer asset management services in India. The two companies plan to invest $150 million each in the joint venture, they said last year. That joint venture is awaiting the Indian market regulator’s approval.

The expansion of BlackRock and Jio Financial’s partnership underscores Reliance’s growing ambitions in the financial services sector. The $237 billion Indian firm already leads the nation’s refinery, retail and telecom sectors. (India’s central bank doesn’t permit tycoons to receive the banking license.)

Jio Financial Services said in a report last year that it was taking a direct-to-customer approach, using alternate data models for personalized offerings and a unified app for diverse customer financial needs, to cut costs and tailor interactions.

Since its public debut in August , Jio Financial Services has already expanded to insurance and lending businesses .

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Jio Financial shares rally after company announces JV with BlackRock

The incorporation of a brokerage firm by the joint venture will follow the launch of its wealth management company.

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Jio Financial Services denies being in talks to acquire Paytm's wallet biz

Nclt approves himadri, dalmia group's joint resolution plan of birla tyres, jio financial-blackrock jv to launch wealth management, broking business, as jio fin awaits mf biz licence, this brokerage sees 24% upside in stock, paytm denies being in talks with jio financial to sell its wallet biz, zee-sony deal: zee withdraws merger implementation application from nclt, brigade enterprises posts record sale bookings of rs 6,013 cr last fiscal, tesla's $1 billion india connection that powers its auto ecosystem, morgan stanley's first quarter profit rises as investment banking rebounds, reliance industries tries to sell us crude oil as russian flows gain.

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