Jio Payments likely to become subsidiary of Jio Financial Services

Jio Payments Bank (JPB) — a joint venture between Reliance Industries (RIL) and State Bank of India (SBI) — is likely to become a subsidiary of the proposed new listed entity, Jio Financial Services (JFS), as part of the overall restructuring of the group’s financial services business which was announced a few days ago after its quarterly results.

The move is expected to give the payments bank, which has been lagging behind with very limited business, a new focus as it has been identified as one of the areas the group will be giving a renewed push to.    

The company had announced it would demerge its financial services business into Reliance Strategic Investments (RSIL), which will be renamed JFS and listed on the stock exchanges.

RSIL is a wholly owned subsidiary of RIL and a Reserve Bank of India (RBI)-registered non-banking financial company.

RIL holds 70 per cent in Reliance Payments Bank (RPB), the remaining shareholding is with SBI.

Sources in the know say that this 70 per cent stake held by RIL will be transferred to JFS. SBI will continue to own the rest of the 30 per cent in RPB.

Spokespersons for RIL and SBI did not respond to queries until the time of going to press.

The joint venture (JV) commenced its business in 2018 after it was one of the players that was given a licence by the RBI. The regulator had provided in-principle approval to over 11 players in 2015, which also included Airtel, Aditya Birla Nuvo, Paytm, Vodafone M-Pesa, Fino Paytech, among others.

However, many decided to shut operations.

For instance, in 2019, Aditya Birla Idea Payments, in which Vodafone M-Pesa was to merge, decided to wind up business on account of unanticipated developments that made the economic model unviable.

However, the big boys in the game include Airtel Payments which has over 153 million customers, of which 50 million are monthly transacting users in the July-September quarter of 2022-23.  It has generated revenues of Rs 3,083 million and earnings before interest, tax, depreciation, and amortisation margin of 4.7 per cent.  Even Paytm Payments Bank has hit 60 million customers, according to its website.      

JPB has had a lacklustre performance. Sources say a key problem has been the companies’ indecision in coming with a clear business plan to give it a full-fledged push. As a result, there have been reports that SBI has even looked at getting out of the JV.

JPB in 2021-22 made an income of only Rs 7.2 crore — nearly half of that 2020-21 when it hit Rs 13 crore. However, its losses in 2021-22 were Rs 33.8 crore.