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 company is gearing up to enter the insurance business. According to a report in the Business Line, RIL is in the final stage of its application to the insurance regulator for life and general businesses. Reliance will be setting up two different companies for the business and is set to file for licenses separately.
“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,” the report quoted a source close to the development.
The insurance companies will be adding a capital base of Rs 1000 crore each. As per the Insurance Regulatory and Development Authority, the minimum paid-up capital for life and general insurance businesses is ₹100 crores each.
“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 a license to operate the business,” the source added.
RIL announced the demerger of its financial arm as Jio Financial Services Ltd (JFSL) on October 21. In a statement, the firm said that RIL shareholders will be issued a share for every share they hold in the company presently.
“Reliance Strategic Investments Limited (RSIL) and their respective shareholders and creditors in terms of which, RIL will demerge its financial services undertaking into RSIL (to be renamed Jio Financial Services Limited or JFSL),” the statement read.
Reliance Strategic Investments Limited is presently a wholly owned subsidiary of RIL and an RBI-registered non-deposit-taking systemically important non-banking financial company.
The investment of RIL in Reliance Industrial Investments and Holdings Limited (RIIHL) was transferred to JFSL.
Jio Financial Services Ltd will acquire liquid assets to provide 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 during the next 3 years of business operations.