Mukesh Ambani's next big bet: Jio Financial Services

In 2016, Mukesh Ambani’s Jio stormed into the telecom space with a predatory pricing strategy and a network that changed the game for the sector and forced competitors to rush to the drawing board. India became known for low data prices, and other players had to follow suit. Now, seven years on, Ambani is aiming for an encore, this time in the highly competitive world of financial services, through the newest member of the Reliance stable, Jio Financial Services (JFS). Already, after the demerger and subsequent listing of JFS on the stock exchanges, the fledgeling JFS commands a market capitalisation of around Rs 1.6 lakh crore—bigger than several public sector banks and next only to that of State Bank of India (SBI). With a net worth of Rs 1.2 lakh crore, Ambani is keen to leverage his balance sheet and draw on Reliance’s huge footprint across telecom and retail to leapfrog into the financial services space. It has over 18,000 retail stores, 480 million telecom customers and 3 million merchant partnerships that JFS can draw on to cross-sell financial products. Aiding Ambani in this ambition is veteran banker and former ICICI Bank and BRICS Bank boss Kundapur Vaman Kamath, the JFS Chairman. The top deck of JFS also has those who have served at ICICI Bank, SBI and BRICS Bank.

In our cover story, Anand Adhikari decodes the JFS blueprint and breaks down every component of Ambani’s strategy, and the competitive landscape. Despite the grand ambition, JFS will have to contend with several challenges along the way as Ambani scales up his latest venture. The financial services space is now highly regulated, with the regulatory arbitrage between banks and NBFCs all but gone. There are already several strong and established players like Bajaj Finance in this space, and new entrants from the Godrej, Piramal and Poonawalla stables are also spreading their wings aggressively. Besides, the biggest banks also offer products similar to what JFS plans to woo customers with. Unsecured lending is also fraught with risks, and given JFS’s size and scale, the Reserve Bank of India will also be keeping a very watchful eye for any signs of systemic risk. How Ambani ramps up JFS in the current financial services environment will be interesting to watch.

The cover story apart, I would also urge you to read the economy package put together by Surabhi where we examine various aspects of the India growth story. While the economy grew at a robust 7.8 per cent in the first quarter of FY24, there are global and domestic headwinds building up that could slow down the growth momentum in the months ahead. Key among these is the global slump that could take a toll on exports, the continuing pressure of retail inflation and the impact of an erratic monsoon. However, the government continues to keep a sharp focus on capital expenditure to spur demand. We also speak to top officials like Finance Secretary T.V. Somanathan and Dipam Secretary Tuhin Kanta Pandey to get their sense of where the economy is heading. Read on.