After announcing the demerger of its financial services arm, billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL) is set to make another big move. The business is preparing to enter the insurance industry. According to a story in the Business Line, RIL is in the last stage of its application to the insurance regulator for life & general operations. Reliance will be setting up two different companies for the business & is set to file for licences separately.
A brief about Reliance Industries Chairman Mukesh Ambani’s jio financial services set to enter insurance business
“While the process for demerger of the financial services business has not formally started yet, the idea is to maintain all the licences ready so that the company may be ready for operations from Day 1 of its operations,” the report quoted a source close to the situation.
Each insurance company would increase its capital base by Rs. 1000 crore. The minimum paid-up capital for enterprises offering both life and general insurance is 100 crores, according to the Insurance Regulatory and Development Authority.
The existing life and general insurance businesses should not be viewed as licence targets, according to the IRDAI. So, precedence is given to those who already have a licence to operate the business in cases of mergers and acquisitions, the source continued.
On October 21, RIL declared that its financial division would become Jio Financial Services Limited (JFSL). According to a statement from the corporation, shareholders of RIL would get one share for each share they already own in the business.
According to the agreement, “Reliance Strategic Investments Limited (RSIL) and their respective shareholders and creditors, RIL will demerge its financial services undertaking into RSIL (to be renamed Jio Financial Services Limited or JFSL).”
Now, RIL’s wholly owned subsidiary Reliance Strategic Investments Limited is a non-deposit-taking, systemically significant non-banking financial entity registered with the RBI.
Reliance Industrial Investments and Holdings Limited (RIIHL) investment from RIL was transferred to JFSL.
During the following three years of business operations, Jio Financial Services Ltd. will acquire liquid assets to supply adequate regulatory capital for lending to consumers and merchants as well as develop other financial services verticals including insurance, digital broking, payment, and asset management.